Released by Docker in 2013, containers have emerged as the driving force behind the cloud native movement and the fundamental re-design of how applications are developed, deployed and managed. Yes, it is certainly early days for containers but with $2 billion invested across 40 start-ups and already 10 container related M&A transactions in 2018 alone, containers are quickly moving from a “cloudy” open source initiative to transforming how cloud operators, SaaS providers and enterprises manage their applications and IT infrastructure. Without diving too deep into the weeds, I can tell this emerging area is complex with a ton of moving parts and just trying to decipher exactly who plays in what bucket can be challenging.
While far from perfect, we settled on five main funding buckets: DevOps/CI/CD, Management, Security, Monitoring and Data Management. In DevOps/CI/CD, we put together start-ups that tended to focus on tools and services for application development vs. pure management and operations platforms. This group has raised $323M or 16% of the total. Management is a broad category covering orchestration to containers/Kubernetes as a service. The 11 start-ups in Management have raised $637M or 31% of the total. Security has the most starts-ups with 14 and has raised $407M or 20% of the total. Monitoring is another well-funded area with 4 start-ups raising $504M or 25% of the total. Lastly, Data Management covers those start-ups focused on storage and data protection/mobility for containers. With 7 start-ups, Data Management has raised $157M or 8% of the total. The top 5 funded starts-ups are Docker, Mesosphere, Sumo Logic, GitLab and Data Dog with $272M, $247M, $230M, $166M and $148M in total funding respectively. The top 5 total to $1.06B or 52% of the $2B raised to date.
- The container/cloud native movement shows no sign of slowing down with 8,000 attendees at Kubecon/CloudNativeCon in Seattle late last year with a few hundred people “hanging out” hoping for a spot to open up.
- Container orchestration is a critical piece of the scaling and management puzzle and by most accounts, Kubernetes is becoming the de-facto standard. This certainly raises questions around the strategic direction of Mesosphere and Docker with its Swarm orchestration platform.
- Leading IT players and the core development community seem to be playing well together and avoiding the missteps of OpenStack.
- Think big and very broadly about containers/cloud native/Kubernetes/micro services, etc. as these frameworks will have significant impact across public and private clouds, on-premise infrastructure and hybrid models.
- There are certainly container skeptics but there seems to be a shift from questioning market adoption to questioning underlying business models of these venture backed companies.
- The $2B in venture funding is certainly impressive as is the over $1.2B in container specific venture M&A over the past two years. There have also been mega open source/container relevant deals with IBM/RedHat for $34B and Microsoft/GitHub for $7.5B. Other active strategic buyers include VMWare, HPE, Oracle, Cisco, NetApp and Nutanix. Keep an eye out for our full container M&A report due out next week. See SASI’s Container Venture Market Map at the link below.