CloudHealth Technologies: Shaping The Future Of Cloud Management

Originally published May 3, 2016

Today, we’re excited to announce our investment in CloudHealth Technologies, the leader in cloud service management. Before we dive into the reasons that compelled Sapphire Ventures to invest, the potential of the CloudHealth platform can be best understood against the macro backdrop of the transition, led by Amazon, towards the public cloud.

Amazon beat analyst expectations on nearly all fronts after reporting first-quarter earnings last week. But what was truly impressive (to us, anyway) was the performance of Amazon Web Services (AWS). AWS revenue was up to $2.57 billion, or 64 percent year-over-year growth. And even more remarkable was that its operating income was $604 million, or 210 percent year-over-year growth.

At Sapphire, we’ve witnessed nearly all our portfolio companies adopt public cloud infrastructure (mostly AWS) to build their startups. And last year we experienced an inflection point when large enterprises too began adopting public cloud infrastructure in droves as AWS increasingly made it easier for developers to not only develop and test on AWS, but also deploy on AWS. Microsoft hastened this trend by putting together a very credible alternative to AWS with Azure for Dot Net focused developers, and Google began dedicating more resources toward its cloud offering as well.

But the adoption of public clouds also brought challenges. As developers began using public cloud infrastructure, decentralized spend and usage patterns led to a lack of IT and finance visibility into public cloud usage and spend. That’s where CloudHealth comes in.

CloudHealth provides a next-generation IT service management platform for managing multi-public cloud and hybrid cloud deployments. Designed to collect, integrate, consolidate and analyze massive amounts of data from various cloud providers, CloudHealth’s platform gives customers the ability to develop business models, analyze usage and report historically in order to project future trends. The platform also allows DevOps and IT operations teams to implement policy management and governance for these cloud deployments and automate tasks to manage and monitor them.

We first connected with CloudHealth over a year ago when Dan Phillips (CEO and co-founder) and Joe Kinsella (CTO and co-founder) painted a vision of IT service management that resonated with us immediately. At that time we believed that most of the public cloud customers were cloud-native startups rather than larger enterprises across diverse verticals. CloudHealth was also still early relative to where we typically invest. But we saw great potential on the horizon, so we kept a close eye in the following months.

As the year progressed, many larger enterprises across industries began moving their infrastructure to public clouds and were seeking a solution to manage both the financial impact and policy framework of public cloud usage. In addition, many cloud-native startups had achieved scale (including a number of our portfolio companies) and began deploying CloudHealth. Most importantly, the company continually outperformed its ambitious financial plan with what we believe are best-in-class growth and efficiency metrics.

Fast forward one year, CloudHealth had hit both the top and bottom-line plan laid out in our initial meeting, so we were first in line with a term sheet to lead the company’s Series C financing.

We have great confidence in the leadership and execution capabilities of CloudHealth’s management. Dan and Joe, along with CloudHealth’s third co-founder Dave Eicher (COO), are veteran entrepreneurs who share a common background of building successful ventures.

But most striking to us is the open and transparent culture they have fostered, based on their team-building experience from prior startups. They identified a seismic transformation transpiring within IT organizations and astutely built a platform that solves for the critical pain points that exist as a result.

We are truly honored that CloudHealth has chosen Sapphire as a partner in its journey to help companies optimize their resources and maximize returns on their cloud investments.


The information set forth herein is not intended to constitute investment advice and under no circumstances should any information provided herein be used or considered as an offer to sell or a solicitation of an offer to buy an interest in any investment fund managed by Sapphire Ventures. Sapphire Ventures does not solicit or make its services available to the public and none of the funds are currently open to new investors. Past performance is not indicative of future performance.

The portfolio companies referred to above do not necessarily represent all of the investments made or recommended by Sapphire Ventures, and were not selected based on the return on Sapphire Ventures’ investment in them. It should not be assumed that the specific investments identified and discussed herein were or will be profitable. Not all investments made by Sapphire Ventures will be profitable or will equal the performance of the companies identified above.

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