Granulate Secures $30M to Optimize Workloads & Reduce Latency

The Increasing Demand for Bandwidth Optimization

The recent surge in online activity, driven by services such as video streaming, online gaming, and sophisticated advertising technologies, is placing unprecedented demands on network bandwidth and increasing backend latency. For many organizations operating within a usage-based cloud environment, mitigating these challenges can translate into substantial compute costs – or necessitate significant investment in proprietary latency reduction technologies.

Granulate Secures Series B Funding

This situation has fostered a fertile ground for startups focused on developing optimization tools. Granulate, a company specializing in intelligent and cost-effective load management software, has announced a new funding round. This follows a period of considerable growth, with customer acquisition increasing by 360% and revenue climbing 570% over the past ten months.

The Tel Aviv-based startup has raised $30 million in a Series B round, spearheaded by Red Dot Capital Partners. Existing investors – Insight Partners, TLV Partners, and Hetz Ventures – also participated, alongside new investor Dawn Capital.

Rapid Growth Fuels Investment

The timing of this Series B funding reflects the current market demand. It comes just months after Granulate completed a $12 million Series A funding round in April of the previous year. Investors cite the company’s robust business expansion as the primary driver for their swift reinvestment.

Yaniv Stern, Managing Partner at Red Dot Capital Partners, stated that Granulate’s innovative technology and impressive growth demonstrate a growing market need for its optimization solutions. He emphasized that Granulate provides a valuable solution for companies seeking to reduce infrastructure costs or improve operational efficiency, complementing existing deployments.

Company Valuation and Market Opportunity

Granulate has not disclosed its current valuation, but this latest funding brings the total capital raised by the startup to $45 million.

The core market opportunity Granulate addresses lies in the increasing prevalence of media-rich content and services, such as e-commerce, which depend on responsive websites and applications to prevent customer abandonment.

Companies are striving to deliver high-quality services while simultaneously managing costs and maintaining healthy profit margins. This necessitates efficient infrastructure and computing resource utilization.

How Granulate's Technology Works

Granulate’s software operates at the server level – either in the cloud or on-premises, based on customer preference – and leverages artificial intelligence to identify and prioritize critical workloads. This prioritization ensures more efficient performance. The company claims its software can enhance response times by up to 40%, increase throughput by as much as fivefold, and reduce costs by up to 60%.

Currently, Granulate maintains partnerships with Amazon Web Services (AWS) and Microsoft Azure, and is initiating discussions with Google Cloud Platform.

Addressing a Gap in the Market

Large technology companies, including Netflix, Google, and Amazon, typically invest heavily in developing their own optimization technologies. However, smaller organizations – even those considered substantial in size – often lack the resources and expertise to address these challenges independently.

Asaf Ezra, co-founder and CEO of Granulate, noted that the level of investment required to replicate their solution is significant. He stated that addressing these low-level issues demands considerable resources and specialized talent.

Granulate’s Current Clientele

Granulate’s customer base includes a major retailer (name undisclosed), AppsFlyer, Period, and PicsArt.

The Impact of 5G Technology

The anticipated rollout of 5G technology and its potential impact on latency are also being considered. While 5G will undoubtedly improve front-end latency, Ezra believes it won’t diminish the need for Granulate’s services.

“5G will not cannibalize Granulate,” Ezra explained. “While it reduces data transmission time, the back-end latency will become the more significant issue. 5G addresses access to the server, but not latency within the server itself.”

Future Development and Competitive Landscape

Looking ahead, Granulate plans to expand its offerings with additional optimization and management solutions. The company also aims to differentiate itself within a competitive landscape that is experiencing consolidation, such as the acquisition of Spot by NetApp last June. Features built around a broader platform will be crucial for retaining customer interest.