In today’s startup environment, companies typically utilize major cloud platforms like Amazon AWS, Microsoft Azure, and Google Cloud rather than investing in their own server infrastructure and data center teams.

However, as a startup evolves, its cloud infrastructure often becomes increasingly complex, potentially spanning multiple providers. When combined with the use of microservices, this can lead to significant complications and escalating costs. Yotascale is focused on addressing this challenge.

The company’s progress is supported by substantial investment, including $13 million in newly secured funding. This Series B round was spearheaded by Aydin Senkut at Felicis, with additional participation from investment firms such as Engineering Capital, Pelion Ventures, and Crosslink Capital. To date, Yotascale has raised a total of $25 million.

This funding announcement resonated with me, as I’ve frequently heard startup leaders express frustration regarding their public cloud expenditures. Once a startup gains momentum, it can be difficult to alter its infrastructure strategy, resulting in a continuous increase in payments to large technology companies – the same companies that may eventually compete with those startups.

Therefore, reducing spending on platforms like AWS or Azure is a desirable outcome for many startups. Yotascale aims to assist organizations in gaining a clearer understanding of, and accurately attributing, their cloud expenses to specific parts of their platform or service, potentially leading to overall cost reductions.

Let’s examine the journey of Yotascale to its current position.

Asim Razzaq, the company’s CEO, shared the history of Yotascale with TechCrunch, noting that it wasn’t founded until after he completed roles at another startup and PayPal.

Before seeking funding or beginning development, Razzaq prioritized thorough customer discovery. This research revealed that existing cloud spend management solutions were inadequate and often led to unproductive debates between infrastructure teams and other departments, such as advocating for cuts to essential areas like backup systems.

Through this process, he also identified Yotascale’s ideal customer: the head of platform engineering.

The startup initially relied on self-funding, as Razzaq wanted to be fully confident in the project’s viability before pursuing external investment.

After beginning work on Yotascale in mid-2015, the company secured initial funding in 2016. The goal was to resolve the challenge of spend attribution for companies utilizing public cloud services – including navigating the complexities of modern architectures – while simultaneously earning the trust of engineering teams, according to Razzaq.

Following a period of customer discovery and achieving product-market fit after raising funds from Engineering Capital, Yotascale completed a Series A round in mid-2018. Razzaq explained to TechCrunch that as confidence in the project grew, expanding the team became necessary, requiring additional capital.

Throughout our conversation with the CEO, it was apparent how methodical his company-building approach has been. From engaging with potential customers and identifying the target buyer, to delaying scaling go-to-market efforts until product-market fit was established, Yotascale appears to deviate from the “raise large sums and scale rapidly” strategy that gained popularity during the peak of the unicorn boom.

How did Yotascale determine when it had achieved product-market fit? According to its CEO, it was when companies proactively integrated Yotascale into their operations, rather than the other way around.

Yotascale reported a 4x increase in year-over-year annual recurring revenue (ARR) at one point this year, although Razzaq was hesitant to disclose specific details regarding this metric.

Consistent with the themes of prudence and caution, Razzaq stated that he wasn’t interested in raising excessively large funding rounds, and that $13 million provides sufficient resources to advance the company’s objectives. Future plans for Yotascale include expanding support to encompass Azure and Google Cloud, in addition to its current AWS capabilities.

(Further evidence of Yotascale’s maturity can be found in its past actions. For instance, the company appointed a new chief revenue officer in 2018 and publicly announced the hire.)

This concludes the discussion of this particular funding round. It will be interesting to observe how significantly Yotascale can increase its ARR by the end of Q3 2021, and whether it will seek further funding before that time.