ElasticBox raises $9M Series A to bring "paint by numbers" simplicity to cloud development

By Michael Carney , written on April 2, 2014

From The News Desk

The cloud is kind of a big deal. People know its name. Guys want to be the cloud, girls want to be with the cloud – or something like that. But with software development rapidly shifting to virtual infrastructure, there’s a need for tools to develop and manage the millions of new applications created within the enterprise each year.

That’s where ElasticBox comes in. The so-called “cloud in a box” company offers an application lifecycle management platform (available in SaaS or virtual machine configurations) that aims to make life easier and more productive for cloud developers. By encapsulating individual apps inside modules, or “Boxes” in company parlance, apps can be deployed and managed in real-time across public, private, or hybrid cloud environments.

Today, the three year old company announced a $9 million Series A funding round co-led by existing investors Nexus Venture Partners and Intel Capital. Seed investors a16z Seed*, Sierra Ventures, and AngelPad did not participate in this round. The new cash brings ElasticBox’s total funding to $12.4 million.

“We stuck to our existing investors because they stood by us during the phase of finding product market fit,” says co-founder and CEO Ravi Srivatsav. “We raised this round, not because we are running out of money, but because it will allow us to accelerate our growth.”

Prior to ElasticBox, deploying apps into the cloud was a complicated and inconsistent ordeal that pitted developers, IT, and CIOs against one another in a quest for access to cloud resources and adherence to corporate governance, according to Srivatsav. ElasticBox standardizes cloud deployments and allows developers to reuse, repurpose, and bundle application “Boxes” across multiple clouds, often with a single click. Srivatsav compares it to the way a DJ blends beats and samples to create new music. Boxes can be thought of as templates that may include, for example, databases, language runtimes, web servers, and middleware. By making applications portable between clouds, enterprises can avoid lock-in.

“We believe this will rapidly and substantially increase cloud usage among businesses of all industries,” Srivatsav says.

“There have been two pivotal moments in enterprise infrastructure development: the creation and implementation of the virtual machine, and the rise of cloud services,” says Nexus Venture Partners managing director Jishnu Bhattacharjee. “ElasticBox is now overhauling enterprise application development, deployment and management within this cloud in what we think is the biggest step in cloud innovation since VMware and Amazon Web Services.”

It’s still early for ElasticBox, but the company has landed some impressive customers, most notably Netflix. The company follows the ServiceNow and Box playbook, Srivatsav says, adopting a freemium business model and inviting rank-and-file enterprise employees to try the product before convincing their executive leadership to pay up. This was how Netflix became a customer.

"ElasticBox has provided us with the technology that we had been looking for, but had never found a great solution," Netflix VP of IT Operations Mike D. Kail said in a statement on today’s funding. "With ElasticBox we are able to both create custom Boxes as well as leverage their preconfigured Boxes to deploy our internal applications, which allows us to focus on innovation instead of orchestration."

In the last year, ElasticBox has grown from six to 50 employees including operations in Mountain View, Madrid, and London. Only five of these employees are sales or sales engineers, meaning that the next phase of growth will need to focus on building out its customer acquisition machine.

“To continue ensuring that this product is enterprise grade, and to complete with the enterprise big four, they need to continue their commitment to investing in R&D as well,” says Intel Capital’s Dharmesh Thakker, who runs the venture firm’s cloud and big data investment practice. “This isn’t a solution for the SMB market where good enough is good enough. We are playing with the big boys, if you will, and need to have an ultra scalable, highly flexible, enterprise-grade product to be successful in this market.”

Intel Capital previously invested in VMware, and its parent company has a 110,000 person IT organization in Intel IT, giving it a unique vantage-point into both the problem ElasticBox is solving and the challenge of building SaaS businesses. It also makes its parent a potential end-customer. The venture firm previously worked with several members of ElasticBox’s founding team via their previous company, DynamicOps (acquired by VMware), according to Thakker.

“We think they’re on track to be a ServiceNow-like, multi-billion dollar private company, because they’re addressing a massive problem,” he says. “The opportunity may not be obvious due to all the noise in this market. But it’s very unusual for the company to build a product and get a large enterprise customer [like Netflix] on a small seed round.”

The competitive landscape for ElasticBox is relatively wide open, Srivatsav says, although that’s bound to change as more and more of the software development moves to the cloud. Also, while the company offers a unique solution, the noise in the cloud category will make it more difficult to get its message to land.

“When devs and IT look at our product, the excitement is there,” Srivatsav says. “Money is going higher up the stack, beyond infrastructure and as close to application as possible. People like to draw parallels to traditional IT companies, but we’re nothing like them.”

ElasticBox may offer a new solution, but it will face the same gravitational forces weighing against other SaaS upstarts. Freemium may be an easy way to get in front of large audiences, but as Box, Yammer, and others have proven, real success in the enterprise space still requires old school block-and-tackle sales. The good news is, the company now has the cash to build out sales machine and the marquee case study to point to when pitching new customers. And, the timing couldn’t be better to bring simplicity to the process of developing for the cloud.

(Disclosure: Andreessen Horowitz partners Marc Andreessen, Jeff Jordan, and Chris Dixon are individual investors in Pando.)

[Image via MMF]