On This Day DigitalOcean Borroweth More Than The VCs Hath Previously Giveth


Dormant VPSB Pathogen
TL;DR:  DO decided to go the debt route rather than begging for more VC funding, and it just took out a loan of $130 million which is more than the $123 million an assortment of venture capitalists had previously coughed up.

DigitalOcean announced Thursday that it has raised $130 million in a credit facility that the company plans to use in large part to expand its global infrastructure as it prepares a key new product launch in December. The financing was led by KeyBanc Capital Markets, along with banks including Barclays , Pacific Western and HSBC...

The startup had previously raised $123 million from investors including Access Industries and Andreessen Horowitz, most recently valuing the company at an estimated $683 million... Why’d DigitalOcean opt for financing instead of more venture capital? The startup simply took the cheapest capital available, Uretsky says...

full article:

Probably the most interesting thing is this quote from Uretsky who once again said he's not interested in competing with AMZN/MSFT/GOOG for the big enterprise customers:

“We don’t need to go into the enterprise, we don’t need to go premium,” he says. “We want to deliver the simplest and easiest to use service.”

The big question going forward is whether there will be enough profits in that small developer fish pool to allow DO to keep its creditors and VC investors happy and remain an independent company...
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Active Member
>>>> Dec 9, 2014

DigitalOcean Arms With $50 Million in Debt for Big Data-Center Battle

By Yuliya Chernova
Dec 9, 2014

Cloud hosting startup DigitalOcean isn’t short on aspirations–or capital requirements. After raising a $37.2 million Series A round led by venture firm Andreessen Horowitz, in February, the New York startup has now secured a $50 million credit facility from Fortress Investment Group LLC, Venture Capital Dispatch has learned.

The money, which comes in the form of a five-year term loan, will help DigitalOcean build out data centers around the globe, with the next one coming to Frankfurt, Germany, said Ben Uretsky, DigitalOcean’s co-founder and chief executive. The New York company is also planning to soon add new features to its cloud hosting service.

DigitalOcean, which is incorporated as Digital Ocean Inc., already offers competitive prices and fast speeds based on its solid state drive servers, but its cloud services have been lacking in features, something that the company has been eager to add.

Once those become available, Mr. Uretsky said, “it’s game over for Google and Amazon.”


The Fortress loan is especially helpful, as few debt providers were willing to lend money for capital expenditures in other countries, he said. It was hard, for example, to obtain financing for the company’s Singapore data center.

DigitalOcean’s investors include IA Ventures, a New York early-stage investor, and CrunchFund. In 2012, DigitalOcean went through the Boulder Techstars program. It has raised $40.4 million in equity in total.
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100% Tier-1 Gogent
DO is delusional.  Fake cloud.  Yeah I know, anything is cloud to liberal minded.

One day Uretsky is saying no competition with Amazon and Google.  Another day he's claiming game over for Amazon and Google.

Now DO wants to be a features company.  Features are mighty hard to sell or show value in with this stuff.  If features were the ticket cPanel would be worth billions. Lots of other dev happy feature softwares and their value isn't up there.

Meh, I see this lending and it smells bad.  They already took in so much money. 

$120 million + $130 million = $250 million+

Valuation at $600 million plus.  Trying to become a billion dollar ego stroke.

I smell signal weakness and think slowing growth is happening.

Face it, those credits they cut on folks, yeah part of was so they didn't have large pile of unknown dollars that could be used or cashed out at any time.  Investment people see big pile like that and shake their heads and disinterest happens.


Active Member
Seems to me DO is doing decent enough. Some profit must be doing. I personally use them for business. 10 dollars per 1GB is not cheap, is the standard nowadays. Do you know how many times I forgot to destroy a droplet? Is so easy $$$$. They never have let me down, Vultr is another good enough, in fact loving that new UI panel. Best part is the articles, for people like me that like to be cutting edge in development technology (important when you are into this business of doing apps) is essential.

We have been hearing this story and comments / critics about the financial part of DO, I'm sure they must be doing some big profit. Again, is so easy to left droplets online that you might find a 100-1K bill in a month, just like that. Sure is better to go the Linode's way in financial terms but if you are going to start anything nowadays you need some funding, specially if you are looking to score big in short time. IMO DO works flawless, support is good, the culture is nice, the UI is smart smooth it just works, i dont know if they DDoS protect their infrastructure but you dont see these DDoS problems that are turning so common in Linode (another provider I love).

Every cloud is fake cloud. There is no such thing as a real cloud. Just pointing that out. In fact we have been there many times, there is no common definition for cloud in technology terms. Cloud is marketing. DO is marketing OP. We even say droplets instead of VPS ;) That's a success IMO.


Dormant VPSB Pathogen
DO is delusional.  Fake cloud. 

I think they're they're betting their future on the wrong cloud (the public cloud).  Low margins, targeting  small spenders, race to the bottom, a ton of competitors all basically peddling the same thing. (shit, they stole Fabozzi's 2012 business plan and look where that plan got him).   HP and Verizon have already announced they're bowing out of the public cloud,  and Rackspace is scaling back on its public cloud and refocusing on managed services because the margins just aren't there in the public cloud.   (I've said this next bit before) I expect to see a lot of consolidation in the public cloud area, and I don't expect DigitalOcean to remain an independent company.

 There is a reason that the enterprise cloud  focused Mirantis has raised twice as much VC money as DO has raised, and I think DO is making a large longterm mistake by ignoring the higher margin enterprise and private cloud markets.
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