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DigitalOcean Gets $130 Million to Build a Bigger, Better Cloud

April 14, 2016, 4:30 PM UTC
Photograph by Getty Images/iStockphoto

Cloud computing provider DigitalOcean, something of a fan favorite for developers who don’t want to sweat the complexities of the other public cloud providers, now has $130 million in credit to build out new cloud services.

The New York City-based company has garnered just over $123 million in venture funding from Andreessen Horowitz and others, but credit financing is seen as a better, cheaper way to finance expensive stuff like data center gear. With credit financing, DigitalOcean has to repay the money but it doesn’t give up another piece of the company to investors do so.

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For non-techies, a public cloud provider aggregates a ton of computers, storage, and networking, which it then rents out to customers who typically pay as they go, either by the hour (for computing), per gigabyte (for storage), and by amount of bandwidth used (for networking). Many companies use these services instead of building more of their own data centers or buying more of their own gear.

This world is dominated by Amazon (AMZN) Web Services, while other behemoths like Microsoft (MSFT) and Google (GOOG) are making a move. That means DigitalOcean, a much smaller company, has its work cut out for it.

Still, many developers think DigitalOcean offers a much easier way to rent or buy cloud computing than the others, which offer a bewildering array options. Even tracking the prices of AWS or Microsoft Azure or Google Cloud Platform can be migraine-inducing.

DigitalOcean sells what it calls “Droplets” of computing power bundled with memory. It claims that users have launched 13 million Droplets to date.

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The flip side of simplicity is that fewer options, um, means fewer options, and that can be a drawback: Most developers end up needing more than computing and memory. They’ll need different storage options and perhaps higher level services, like workflow or database capabilities.

Towards that end, DigitalOcean is working on a block storage option similar to Amazon’s Elastic Block Store (EBS) as well as other features, chief executive Ben Uretsky told Fortune. That’s a big part of what this new money is for, he said.