Cloud cost optimization startup CloudZero closes $56M investment

Startup CloudZero Inc. has raised $56 million from investors to enhance its namesake software platform, which helps enterprises lower their cloud expenses.

The company announced the Series C round on Wednesday. It was led by BlueCrest Capital Management and Innovius Capital with participation from MongoDB Inc., Matrix Partners, Threshold Ventures, Underscore VC and G20 Ventures. The round brings CloudZero’s total outside funding to more than $85 million.

Companies search for opportunities to lower cloud costs by analyzing their infrastructure- and software-as-service bills. Each cloud provider formats spending data differently, which means that the data has to be organized into a single, consistent format before it can be reviewed. CloudZero says that its platform automates the task to save time for finance teams.

After normalizing spending data, the company’s software breaks it down by source. CloudZero can display the costs incurred by each of a company’s cloud environments, workloads and business units. It also provides more granular information. The platform can calculate, among others, the cloud expenses associated with specific application features.

Mapping cloud costs to specific software assets is a challenge in Kubernetes clusters. The reason is that such clusters can contain hundreds of containers, automation tools and other components. Often, each component has a label that describes what it does, but the descriptions aren’t always up-to-date. CloudZero says that its platform can provide visibility into Kubernetes spending regardless of label quality.

One way companies reduce their cloud costs is by making long-term purchase commitments. When an enterprise agrees to use an instance or a cloud application for an extended period of time, it can secure significant discounts. The more of a company’s cloud spending is folded into longer-term purchase agreements, the more it saves.

CloudZero can measure how effectively a company uses long-term purchase agreements. It also identifies spending spikes. Built-in artificial intelligence models measure out the average hourly cost of running a cloud workload and detect sudden increases.

On occasion of this week’s funding round, the company disclosed that it experienced “triple-digit growth” in the past year. CloudZero now manages more than $14 billion in cloud spending for customers. It claims that those customers take an average of three months to make back what they spend on its software.

CloudZero will use the new funding to accelerate go-to-market initiatives with a focus on establishing more partnerships. In parallel, the company plans to develop more features for its platform. It will roll out new integrations with developer tools and capabilities for forecasting organizations’ future cloud spending. 

Image: CloudZero