Mesosphere’s Valuation Could Hit Around $600M In Latest Financing Round

We’re hearing from sources that Mesosphere, a company that’s built on the open-source project Apache Mesos, is raising a financing round at a valuation that could be as much as $600 million.

The talks are, of course, still fluid and valuation numbers are always cloudy — so any final deal could end up outside of what we’re hearing on our end. This round in particular comes after a potential deal with Microsoft didn’t materialize, according to The Information. And the company sought a valuation north of $300 million in its current financing round, according to that report.

In these cases, a lot of conversations are happening simultaneously, and often used as negotiating tools for one another. So it’s possible that this number could end up being what the company is looking for, but not necessarily what it’s going to get in the end.

Mesosphere is built upon that open-source project similar to the way that Cloudera is a commercial entity built on top of Hadoop. It allows IT managers to treat an entire data center as a single pool of resources, instead of having to spin up individual virtual machines. It takes that efficiency you get from virtualizing a single machine and applies it across the data center, essentially enabling you to use whatever resources are available.

With that working, system resources tap into that single pool of resources, and the software distributes those jobs across all of the machines available in a cluster, instead of relying on individual virtual machines. In a sense, the entire data center is treated as a virtual machine that systems can tap into. Applications today usually work across multiple cloud-based servers, so it works to make those systems better operate — which could reduce overall costs and make online services more efficient and less error-prone.

The advantage that a company likes this bring is how it adds value over and above the free open source package — usually offering a combination of service, tools and functions not necessarily available in the free version. Companies like Cloudera and Red Hat have built companies on top of open source projects.

The value for a company like this is, like Cloudera, in its applications of the open source technology — and that can attract suitors. It’s attracted partners like Microsoft and Nvidia, at the least (and, of course, partnerships can often lead to deeper conversations). The Information also reported that the financing round could be more than $50 million in a strategic round including Microsoft and Intel.

The company previously raised $36 million in a financing round in October last year. Prior to this financing round, the company raised $50 million. Investors in the company include Andreessen Horowitz, Khosla Ventures and Fuel Capital.