Posts Tagged ‘Cloud’

Sequoia to Lead $75 Million Round for Cloud Software Startup Okta

June 10th, 2014

Okta, the cloud software startup that helps companies manage login identities across multiple services, plans to announce later this week that it has secured a new round of funding led by Sequoia Capital.

Sources familiar with the deal didn’t give precise figures, but tell Re/code that Sequoia’s Growth fund will lead the investment of about $70 million $75 million* at a pre-money valuation approaching $600 million. Pat Grady, a Sequoia partner, will join Okta’s board as its fifth member. The round will also include at least one new investor, though its identity couldn’t be learned. Allen & Co., the investment bank that has in recent years come to specialize in advising tech companies, advised Okta. The deal is expected to be announced on Wednesday. (See Update below.)

It would be the third time that Sequoia has led an investment in Okta. The firm led Okta’s $27 million Series D last fall, as well as its $25 million Series C.

The new funding would bring Okta’s total capital raised to about $150 million $155 million. Other prior investors include Andreessen Horowitz, Greylock Partners, Khosla Ventures and Floodgate.

As numerous companies have embraced multiple types of cloud services to run their businesses, more than 1,000 have chosen Okta, based in San Francisco, to manage what’s often called the “identity layer” — user names, passwords and other credentials used to access various services like, Workday and Marketo. Okta provides a single sign-on capability that makes it easy to grant and remove access to the many Web services that a company might use. Its customers include Chiquita Brands, LinkedIn, MGM Resorts, Western Union and software giant SAP.

In an interview in September, Okta CEO Todd McKinnon predicted the company would hit break-even within 24 months. Assuming it’s still on track, that would now be 14 months away. In April, Okta named Krista Anderson, previously a senior vice president at, as its chief customer officer.

It’s a competitive business. Last month Santa Clara, Calif.-based Centrify, another player in the identity management space, announced that it had secured a $42 million Series E from Samsung Ventures, Fortinet and Docomo Capital. Another player, Ping Identity, raised $44 million in a Series F led by W Capital Partners and DFJ Growth last July, and has been working its way toward an IPO.

Update: Okta has taken the wraps off its news, as other outlets are now confirming Re/code’s initial report. The exact amount of the funding round is $75 million and the new investors are mutual fund firm Janus Capital Group and Altimeter Capital.

McKinnon, Okta’s CEO has been talking about his IPO hopes for some time, and is reiterating them in comments today. He also discussed the tricky timing of his attempts to raise money in April just as the valuations of publicly held cloud companies had been falling.


How cloud computing is like getting a rental car

May 30th, 2014

Though it’s commonly associated with free storage providers, like Dropbox, or online word processors, like Google Docs, cloud computing can involve more advanced areas of technology, too.

That’s part of the reason that talking about “the cloud” can get confusing for a lot of people. Especially when you’re trying to figure out a sensible cloud strategy for your small business.

Operating an information technology system in the cloud is like renting a car. Where you rent a car, you expect to be able to jump in and drive off, safe in the knowledge that your car will work. You also expect the rental company to take care of all necessary maintenance, repairs and breakdown assistance.

The same is true of the “cloud.” When you sign up, you get to use the software without worrying about installation, maintenance, updates or security. You also don’t need a server or any of the other additional IT investments that larger suites of software used to require. All that is taken care of by your cloud service provider.

Renting a car doesn’t require the significant upfront investment that buying a car does. Also, by renting, you can always stay in a current model, versus buying a car that depreciates in value as soon as you drive it off the lot. Cloud services also don’t require an upfront cost. Your business pays a monthly flat-rate per user fee, and if your business grows and you hire new staff, you can switch on new licenses, and similarly turn them off as needed.

There are many benefits to small businesses that wish to leverage cloud computing capabilities. For many small businesses, it’s helpful to start with something simple — like email.

Hosted email through Microsoft or Google, which are the two biggest players in the market right now, is a great (and safe) place to start your cloud strategy. By hosting your email, calendars, contacts and chat through one of these providers, you don’t have to purchase servers, license software or upgrade your infrastructure — shifting email costs entirely to your operating budget.

There are questions that you need to ask before you consider moving a critical line of business software applications to the cloud, and it is important to work with a trusted IT adviser who can help answer these tough questions. This adviser can work with your software vendor to understand the various dynamics of what moving into the cloud actually entails and lay those practical considerations out to you in a way that’s easy to understand.

James Fields is owner and president of IT service provider Concept Technology and IT staffing company Scout Staffing. Visit Concept Technology online at and Scout online at

Something to consider

why you wouldn’t want to move an internal software application into the cloud


When moving business applications to the cloud, you’re at the mercy of your cloud provider when answering the question: Is your data secure? You can’t control the provider’s diligence, and if provider is not doing its job to secure the application, it can lead to a direct compromise of your data.


Does your business software vendor support having your system in the cloud? There are some that still expect it be hosted on an internal server.


The more cloud space you “rent,” the more bandwidth you require. Before moving an entire application offsite, you need to make sure you have enough available bandwidth to support the move.


VCs eye big cloud software returns despite dwindling valuations

May 23rd, 2014

A cloud software boom has nudged startups into unlikely realms such as dairy farms, yoga studios and back-of-the-building loading docks, leading venture capitalists to hope for stratospheric returns.

Venture capitalists poured more than $11 billion into software last year, more than into any other sector and about double the amount in 2010, according to the National Venture Capital Association. The number of deals in which venture firms have backed software startups has risen by about half in the same time, to 1,570 last year.

Not everyone shares their enthusiasm. Wall Street investors are voting with their wallets when it comes to the hottest sector, known as “software as a service” or SaaS. Internet-delivered, subscription-based software has slumped this year, with big companies like Workday Inc and Inc each shedding around 9 percent of their market value.

Venture capitalists say that decline has dragged down the valuations of private companies. A few months ago, VCs counted on companies trading at 10 times forward revenue when they went public, instead of five times today.

While those numbers might have some observers muttering about bubbles, venture capitalists defend their bets, saying that software is just starting its advance into all kinds of unexpected and lucrative places.

“People are getting it more than they used to,” said Jason Pressman of Shasta Ventures, which uses mobile devices to make formerly deskbound software reachable from anywhere, could supercharge the adoption of business software.

Such ventures increasingly must target a smaller slice of business given that the easy broad terrain of human-resources management, bookkeeping, and the like have already been taken.

“I see a lot of startups going after super niche categories,” said Chuck Ganapathi, a former Salesforce executive and founder of Tactile, which synchronizes data from calendars, social media, and other programs.

Few SaaS start-ups will become the Microsofts and Oracles of tomorrow, but venture capitalists said that does not faze them. The also-rans will get bought up by big established software companies scrambling to adapt to a cloud-based market.


And a lucky few SaaS businesses will make it all the way to a public-market debut, as Workday did two years ago.

“The top 20 percent become real companies,” Scott Weiss of venture firm Andreessen Horowitz said in an interview.

Others, he wrote in a blog post last year, will be sold, but the big businesses that buy them will not always know how to handle their start-up acquisitions.

“They will smother these (start-up) companies with too much negative attention, mismatched sales forces, and misunderstood business models,” Weiss predicted.

From his perspective, that just creates a double investment opportunity, as the bigger companies’ bungling paves the way for entrepreneurs to revive and try again the SaaS idea that withered once a bigger company bought it.

SaaS allows companies to easily try programs without technology infrastructure upheaval or tedious staff training. Dropping a SaaS program is no big deal if it does not work out. The flexibility accounts for why many industries are beginning to embrace the model and bring it mainstream.

At Irvine, California-based loading-dock servicing company McKinley Equipment, technicians ditched three-part carbon-paper work orders for iPads and ServiceMax software. ServiceMax, which earlier this year raised $71 million in new funding, directs the technicians to malfunctioning loading docks, helps locate the bug, and streamlines the ordering of replacement parts.

“In the old days, when a technician needed something, he would draw a picture, ‘I need this part, it’s the thingamajig that connects the blah,’” recalled McKinley Chief Financial Officer Kevin Rusin, pointing to delays or wrong parts being delivered. Now, ServiceMax and greater use of photos help identify the right gear for order that day, contributing to double digit revenue growth at McKinley.

Other niche players include, which allows farmers to track their milk; and, which allows yoga studios to manage class schedules and customers. Yesware’s software analyzes interactions with emails, telling salespeople who has opened and forwarded around their messages so they know where to focus their follow-up efforts.

Even though SaaS seemingly encroaches everywhere, many venture capitalists remain reluctant to invest, perhaps because they think of software in the traditional non-mobile, non-accessible way, said Battery Ventures’ Roger Lee.

“Most people’s framework for investing is in the rear-view mirror,” said Lee, who blogs frequently about software. “What you need to do is completely change your frame of reference.”


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