Private cloud enterprise solution Nubeliu has raised a seed round from Latin American powerhouse investors Kaszek Ventures in the “couple of millions,” according to a source close to the company.
Storm Ventures and MercadoLibre (NASDAQ: MELI) founder and CEO Marcos Galperin also participated in the round.
Nubeliu is the first venture to offer enterprise private cloud solutions based on OpenStack in Latin America. The five founding members – there are only ten people at the company now -built one of the biggest OpenStack private cloud instances in Latin America for MercadoLibre.
OpenStack is the most widely supported open software for building private and public clouds, and was originally launched by RackSpace and NASA to combat the dominance of public cloud vendors AWS, Google Cloud and Microsoft Azure.
Co-founder and CEO Rodrigo Benzaquen was MercadoLibre’s first IT employee in 1999, and spent fourteen years with the company, including the last three in Palo Alto, when Marcos Galperin asked him to open a new R&D center.
“Living in Palo Alto changed my life,” Benzaquen tells me on a Skype call from São Paulo. “Imagine, I’d been working on MercadoLibre in the same office with the same team, then I moved to a completely different environment, with many startups, and people doing crazy things, and going to all of the meetups….. I went to a co-working space with all these startups, and it changed my way of thinking. I said, ‘I want to build my own company in Argentina, raise my own money, do something I really like’.”
Benzaquen decided to build a company off his direct experience with OpenStack on the enterprise side to create a solution for other businesses managing their own servers.
“I knew I loved infrastructure and solving these kinds of problems. I’ve been doing this from a few servers at MercadoLibre to, right now, more than 12,000 virtual instances, 2,000 physical servers and over 1.4 billion images,” Benzaquen says.
He and co-founder Richard Hager, also a MercadoLibre alum, have spent the last eight months building and testing product with beta-clients, using Benzaquen’s own capital. Benzaquen and Hager sit on the board with Hernan Kazah from Kaszek Ventures.
Several startups are already offering comparable solutions in the US, including Mirantis, which has raised over $120 million in investment capital, and MetaCloud, which was acquired by Cisco this September. “Those are the biggest,” Benzaquen says. One of Nubeliu’s investors, Ryan Floyd from Storm Ventures, sits on the board of MetaCloud and SwitftStack, and Benzaquen says executives at both companies were supportive of his entry into the Latin American market – starting with Brazil, where co-founder Hager is based.
Unlike the American market, where AWS, Google Cloud and Microsoft Azure dominate the public cloud space, Benzaquen says there are no big players to compete with in Latin America.
“People here typically have data centers and their own servers. A lot of them can’t keep their data in a public cloud for security reasons, but they want the agility and flexibility that a public cloud would give them.”
Benzaquen acknowledges last year’s media scandal, when Edward Snowden released documents indicating the NSA was spying on President Dilma Rousseff, have helped their entry into the Brazilian market by putting data security in the spotlight. Rousseff responded to the revelations with a series of announcements for new digital security measures, including a plan to require foreign companies like Facebook and YouTube to keep their Brazilian user data on local servers inside Brazil, and used congressional urgency to force a vote on Brazil’s pending Internet Bill of Rights, which passed this April.
Benzaquen also acknowledges there is more of a learning curve to overcome in Brazil – certainly versus his time in Silicon Valley – particularly when it comes to Nubeliu’s approach to the hardware. “We can run on any kind of hardware they have, or get them new, cheap hardware – the cheaper the better for the client,” Benzaquen says, allowing Nubeliu to price their offering at about half of what their US counterparts are charging. “But it’s a lot of work trying to educate them on why they should run on commodity hardware instead of expensive servers like CISCO and HP. The hardware is irrelevant. The key in private cloud is the software.”