For many startups, the chill in the private markets in recent months has made it more challenging to raise funds. But for some lucky founders, like Ben Schaechter, the process has been surprisingly expeditious: About two weeks, he tells Fortune.
Vantage, Schaechter's three-year-old startup he cofounded with Brooke McKim that helps companies manage the costs of their cloud platforms like Amazon's AWS, just raised $21 million in an oversubscribed Series A round from investors including Scale Venture Partners, which led the round, existing investor Andreessen Horowitz, and Cloudflare's CEO Matthew Prince (Schaechter declined to provide the company's current valuation). Schaechter, Vantage's CEO, said they started raising in early January, when they spoke with "the majority" of "high notoriety" VCs, and within about two weeks, had "multiple term sheets" from their choice investors.
That demand, and that quick turnaround, is thanks in large part to a boost in Vantage's business over the past six months or so, during which there's been a surge in demand from companies wanting to cut costs and be more efficient—with cloud spending being high on the list for companies big and small. Schaechter says that since the summer of 2022, Vantage has seen "very significant growth," and their revenue nearly "10x'd" in 2022, with the majority of that growth seen in the latter half of the year—That's his "impression of why we were able to raise the round as quickly as we were." He says the company entered 2023 being cash flow positive, but sees it being temporary as they prioritize growth with the funds.
Though the rockier economic climate has prompted companies to trim costs, they've also increased the number of cloud providers they use in recent years beyond just AWS or Azure, adding services like Datadog, Snowflake, or Databricks. Schaechter notes Vantage now supports those other providers, and says companies are “looking for a piece of software," like Vantage, "that can optimize not only their AWS costs, but all of their cloud infrastructure-based costs.” Among Vantage's more than 300 customers are Square, NASA, Ripple, and BuzzFeed. The company says they're helping customers track over $1 billion in annualized infrastructure costs.
As we head further into 2023, Schaechter sees some big trends continuing: "When before in the last 10 years [did] an organization really have to care about efficient versus inefficient use, because they could always rely on growth?" He thinks we're now in what several CEOs are calling an "era of efficiency," and there's a "new behavior reset where people just are hyper aware of the fact that they can actually save money, and it's just the new normal going forward." He sees that cost scrutiny lasting into 2024.
With the fresh cash, Schaechter tells Fortune that his team, currently about 15, is ramping up hiring, planning to add between 30 and 40 new employees this year.
Read the full pitch deck (certain information has been redacted) that helped Vantage score its Series A below, or here.
