Expenditure on cloud services has become a heavy burden for companies, naturally giving rise to products designed to optimize cloud usage and reduce the monthly bill. Two Israeli startups that developed such products have made impressive exits: in 2020, US company NetApp bought Spot for $450 million, and this year, Intel bought Granulate for $650 million.
A third Israeli company with a cloud optimization product is Zesty, which was founded in 2019 by Maxim Melamedov (CEO) and Alexey Baikov (CTO). Today, Zesty announced that it had raised $75 million in a Series B round co-led by B Capital and Sapphire Ventures, with participation from Next47 and S Capital. This brings the total amount raised by the company to date to $116 million. Most of the money in the current round will go to the company, with a small proportion going to the founders. "This raise gives us backing from our investors not to be sold but rather to build something big," Melamedov says
Zesty has built an automated system that defines and adapts cloud configurations dynamically in real time in accordance with the enterprise’s changing needs. If the enterprise’s rate of consumption of resources rises, Zesty’s system will order more storage and computing resources from the provider so that applications will not crash. If the consumption rate falls, Zesty’s system will release resources so that the enterprise will not pay too much. All this happens without DevOps teams having to make adjustments manually.
"There are companies like Spot where the emphasis is on cutting costs, while compromising on stability. As far as we are concerned, the order of importance is first of all stability, then performance, and lastly costs. If necessary, we will even cause the customer to pay more," says Melamedov.
Zesty employs 120 people, 110 of them in Israel. The company serves over 300 customers, with most of its revenue coming from North America. In Israel, Zesty works with companies such as Armis, Monday, Wiz, and Gong.io.
Recurring revenue doubled
According to Melamedov, Zesty’s annual recurring revenue has doubled since the beginning of 2022, and the company’s valuation in the current round, which closed a few weeks ago, was three times higher than in its previous round. B-Capital, which led the round, previously invested in Israeli companies OwnBackup and Perimeter 81.
"The funds that led the round asked their portfolio companies what product they would not forego even during a recession, and they pointed to us. That’s what worked in our favor in the round," says Melamedov.
Published by Globes, Israel business news - en.globes.co.il - on September 13, 2022.
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