DigitalOcean Raises $3.2 Million in Funding to Expand IaaS Solutions

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Infrastructure-as-a-service provider DigitalOcean announced on Wednesday it has raised a $3.2 million seed round led by IA Ventures, with participation from CrunchFund and TechStars.

The move comes a few months after DigitalOcean suffered a data breach that impacted a “small percentage of customers”, and promptly rolled out a fix for those affected customers.

DigitalOcean nearly has 350,000 cloud servers to date, adding an average of 500 new subscribers a day.

The company says it plans to use the proceeds from this funding round to hire more marketing and engineering employees, as well as build out its infrastructure.

The funding round comes at an opportune time, as DigitalOcean’s rapid growth has created an increasing need for more servers and bandwidth to meet this demand.

Uretsky also noted that its fast and early growth often meant the company ended up in a capacity crunch and, at times, couldn’t add users as fast as it wanted to because it simply didn’t have enough resources available in its data centers.

IA Ventures has had an ongoing relationship with Digital Ocean, having previously helped the company through assistance with financing, attracting employees and helping the company develop the right business metrics to measure its performance.

In addition, IA Ventures referred DigitalOcean to TechStars, which participated in the latest round because it converted its original convertible notes.

Since January, Digital Ocean has nearly tripled its staff from 12 employees to over 30, enabling the company to be able to have enough manpower to develop new features for its cloud service.

Digital Ocean will soon launch private networking in its new New York data center in Google’s 111 Eighth Avenue building, along with plans to launch support for CDNs, load balancing, IPV6, and usage graphs in the dashboard.

Earlier this year, DigitalOcean joined many other IT companies in exhibiting at SXSW Interactive 2013 in Austin.

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