Goldman Sachs just poured $45 million into a company picking up Amazon’s slack in the cloud – Yahoo Finance

thor culverhouse skytap ceo

(Skytap CEO Thor CulverhouseSkytap) Amazon Web Services is the big behemoth of cloud computing, followed by Microsoft Azure and Google Cloud.

The economies of scale of cloud services mean that it's very difficult for any new players to compete unless they have theglobal reach and resourcesof those tech titans.

Difficult, but not impossible, especially if you zero in on an underserved part of the market. Take, for example, Skytap, a 10-year-old cloud computing service provider based in Seattle.

Skytap started as a project out of the University of Washington. It focuses exclusively on helping huge companies update their existing, old-school software for the modern age. By devoting all its energies to that one corner of the market, Skytap believes it can thrive even under Amazon's shadow.

"It doesn't make sense for us to go head-to-head with Amazon in their areas of expertise," Skytap CEOThor Culverhouse said.

Skytap already has name-brand customers includingGE Healthcare and NBCUniversal. And investors are on board too.

The companyjust announced a $45 million round of funding led by Goldman Sachs. That brings its total funding to over $100 million. If all goes according to plan, the investment will start an 18-to-24 month countdown to an eventual IPO,Culverhouse said.

Amazon Web Services got its start by focusing on winning over individual developers and small startups, including Slack and Airbnb, and reaping the benefits as those companies grew and expanded their usage.To that end, Amazon as well as chief rivals Google and Microsoft prides itselfon supporting the most up-to-date developer tools and methods.

By contrast, Skytap's sales pitch is it offers a cloud computing platform that's designedto behave like an old-school, legacy data center, makingit easier for enterprises to bring their existing large-scale applications to the cloud. And once those applications areinthe cloud, the company can offer customers a slew of benefits,Culverhouse said.

(Amazon Web Services CEO Andy JassyAmazon)

Similar to AWS, Skytapallows customers to easily add or remove computing capacity in line with their needs. And its support for trendy technologies like Docker software containers allows customers toslowly but surely modernize their software.

Skytap is starting to catch on with customers.The company's second-quarter revenue this year was three times higher than in the same period last year, Culverhouse said, although he declined to disclose the actualnumbers. Contributing to the company'sgrowth has beena resale arrangement with IBM, where Big Blue provides Skytap technology to its own customers.

As it ramps up for its IPO, Skytap is doubling down on what it's already doing, Culverhouse said. Currently, the company employs about 170 people; Culverhouse expects that number to double in the next year, with a focus on sales and engineering. Similarly, Skytap plans to grow its international presence.

microsoft scott guthrie

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(Microsoft Executive VP of Cloud and Enterprise Scott GuthrieMicrosoft)

What Skytap won't be doing is making moves that will put it more directly into Amazon's path, Culverhouse said. Instead, Skytap will continue to focus its energies on helping big enterprise customers bring their existing software into the cloud.

"That's where we can deliver the most value," he said.

Goldman Sachs has been busy in the tech sector of late. In addition to investing in Skytap, the venerable financial firm announced Monday that it also led a $44 million investment in database provider Redis Labs.

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Goldman Sachs just poured $45 million into a company picking up Amazon's slack in the cloud - Yahoo Finance

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