10 Hot Cloud Startups to Watch

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Why they're on this list: Most enterprises know they should virtualize their infrastructures, but they struggle with where and how to start. According to dinCloud, virtualization and cloud computing aren't just about hosting servers alone, or giving customers virtual machines in the cloud. They are about business provisioning and helping businesses transform their physical environments to virtual ones.

dinCloud's software enables the rapid migration/provisioning of desktops, servers, storage, networking and applications to a Virtual Private Data Center. Customers can control as much of this infrastructure as they want through an online cloud orchestration and management platform, dinManage.

High-profile partner Microsoft says that it worked with dinCloud to help save a financial services customer 50 percent on IT spending. In this case, dinCloud hosts 250 virtual desktops, 30 virtual servers, and provides second site back up in the cloud.

Named customers include LANDesk, Grant Thornton International, King's Hawaiian and National Asset Direct. dinCloud also finished fourth in Startup50 voting with 8.5 percent of the vote total.

Market landscape and competition: Gartner predicts that the cloud Infrastructure-as-a-Service (IaaS) spending will exceed $72 billion, (42 percent CAGR) by 2016. Competitors include AppZero, Eucalyptus, Nebula, RingCube and Rackspace.

7. HyTrust

What they do: Develop virtualization security tools.

Headquarters: Mountain View, Calif.

CEO: John De Santis serves as CEO. Eric Chiu co-founded the company and is its president. De Santis was formerly chairman and CEO of TriCipher, a software security infrastructure company acquired by VMware in 2010. After the acquisition, he served as VP, Cloud Services for VMware. Chiu was previously VP of Sales and Business Development for Cemaphore Systems.

Founded: April, 2009

Funding: HyTrust has raised $16 million from Trident Capital, Granite Ventures and Epic Ventures, as well as strategic corporate investors such as Cisco and VMware.

Why they're on this list: Virtualized and cloud infrastructures create new security, control, management and compliance challenges for IT staffs. Organizations take big risks when they move to the cloud or rely on virtualization when critical applications and sensitive information are not properly secured.

The HyTrust Appliance delivers access control, enforcement of policy across virtual infrastructures, hypervisor hardening, and audit-quality logging among other features. By addressing these requirements, HyTrust is able to provide organizations with the control and visibility required for them to virtualize Tier 1 applications, meet corporate governance requirements, and avoid costly downtime or other possibly more serious business disruption.

Customers include AIG, U.S. Army, Northrop Grumman, Pepsi, McKesson, Home Shopping Network, Federal Reserve Bank of Chicago, UC Berkeley, State of New Mexico, and Denver Museum of Nature & Science.

Market landscape and competition: The cloud security market is incredibly crowded, but HyTrust has carved out a solid niche by focusing on hypervisor vulnerabilities. Competitors include Altor Networks (now Juniper) and Catbird.

8. Nebula

What they do: Provide OpenStack-based appliances that let businesses deploy and manage private clouds.

Headquarters: Palo Alto, Calif.

CEO: Chris Kemp, who was previously CTO for IT at NASA, where he also co-founded the OpenStack project

Founded: April 2011

Funding: In September 2012, the company raised a $25 million Series B round led by Comcast Ventures and Highland Capital Partners. Kleiner Perkins, William Hearts II, Maynard Webb, Scott McNealy, Innovation Endeavors participating and Google's first three investors (Andy Bechtolsheim, David Cheriton and Ram Shriram) also participated.

Why they're on this list: OpenStack is shaking up the cloud infrastructure landscape, serving as the main open-source alternative (sorry CloudStack) to VMware. CEO Chris Kemp co-founded OpenStack while he was at NASA, and along with Rackspace, Nebula is a key driver helping to make OpenStack a viable alternative to closed cloud systems.

NASA and several other government agencies use OpenStack for their own private clouds. Nebula delivers its private cloud solution as an appliance.

Market potential and competitive landscape: Cloud market predictions are all over the map (Forrester predicts that the global cloud computing market will grow from $40.7 billion in 2011 to more than $241 billion in 2020, while Deloitte predicts that cloud-based applications will only replace 2.34 percent of enterprise IT spending in 2014 rising to 14.49 percent in 2020, while also pushing down costs in the process). We do know, though, that the cloud deployment and management market will be large.

This sector is a land grab as of now, but there is a ton of competition already, including VMware, AWS, Citrix (CloudStack), dinCloud, AppZero, Eucalyptus, Rackspace, OnApp, Piston and many others.

9. OnApp

What they do: Provide cloud services, including IaaS, CDN and storage services.

Headquarters: London, U.K.

CEO: Ditlev Bredahl. Before founding OnApp, Ditlev led UK2 Group's hosting companies as Managing Director and CEO.

Founded: July 2010

Funding: To date, OnApp has raised $20 million in two rounds of funding. The latest B round of funding was led by UK private equity firm LDC.

Why they're on this list: If you're a traditional hosting provider, you have either already transitioned to being a cloud provider or you are scrambling to do so.

OnApp's mission is to remove the entry barriers to the cloud for Web hosts, telcos, ISPs, MSPs and other traditional service providers. OnApp developed a turnkey system that enables service providers to create their own cloud services, using their existing servers or data centers, with no up-front software investment required.

The OnApp Cloud platform takes care of all core cloud management/orchestration functions, such as cloud deployment, VM management, failover and autoscaling.It also includes the capabilities lacking from most enterprise-focused private cloud platforms, but which service providers absolutely depend on, such as support for different utility and plan-based billing models; the ability to bill for every hardware resource in your cloud; and user management, limits and permissions.

The latest version of the OnApp Cloud platform includes a built-in SAN, a global CDN with video streaming support, DNS management, autoscaling, load balancing and a range of other features. Customers include PEER1 Hosting, GMO, UK2 Group, Dediserve and eApps. OnApp finished third in Startup50 voting with 9.6 percent of the total.

Market landscape and competition: OnApp is targeting a public cloud IaaS market currently estimated at $6.2 billion, according to Garter, and a CDN market estimated at $2.5 billion, according to Markets and Markets.

Competitors include Boomi and ScaleUp Technologies. With its recent service upgrade, OnApp now also competes with CDN providers.

10. SaaS Markets

What they do: Provide the cloud-based infrastructure that enterprises can use to launch mobile app and SaaS stores.

Headquarters: San Mateo, Calif.

CEO: Ferdi Roberts, who previously held senior executive positions at Yahoo, Cisco, and Ariba.

Founded: 2011

Funding: They have not disclosed funding details.

Why they're on this list: As BYOD becomes more common and as the "appification" trend continues unabated, enterprises must find ways to approve and control these apps. SaaS Markets intends to address this problem by giving enterprises the tools they need to launch their own app and SaaS stores.

App qualification is managed by the SaaS Markets Application Partner team, which runs SaaS applications through a series of rigorous tests. MarketMaker, the SaaS Markets platform, includes a search engine to make it easy to find all relevant apps, and evaluate and test them side-by-side in terms of capabilities, interface, features and cost.

Currently, SaaS Market also offers more than 1,300 pre-qualified SaaS apps for tasks that range from managing social media outbound messages to project management to cash flow management to security.

Customers include the Montana Chamber of Commerce, Association of Washington Business, Park City, UT Chamber of Commerce and Auburn, WA Chamber of Commerce.

Market landscape and competition: Forrester Research is projecting the SaaS software market to increase 25 percent in 2013 to $59 billion, a 25 percent increase. In 2014, Forrester projects the market to total $75 billion. Competitors include App47 and AppCentral.

Startup Voting, Criteria and Weighting Why does startup A earn a spot on the list and Startup B not earn a place. While it's a largely subjective process, we've put some criteria in place to add as much objectivity as possible. With early stage startups that barely have product out the door, even following a decision tree won't make this subjective process objective. But it's a start.

Here are the criteria used when evaluating startups, and the approximate weight given to each: 1. How serious is the pain point the startup addresses, and is it something people (or orgs) are really willing to pay for? 2. If the startup is releasing a social media tool, mobile app or free cloud app--or anything free--is there a roadmap in place to monetize it? How realistic is it? 3. How unique is the offering? 4. How high is the barrier to entry for other competitors? These top four, all about products and positioning, are weighted at about 25 percent. 5. What's the pedigree/track records of the management team/founders? (15 percent) 6. Have they raised funding? If so, how much and from whom? (15 percent) 7. Do they have any early customers in place? Extra points for on-the-record customers. (10 percent) 8. How well did they do in the voting? Being able to mobilize a voting base helps prove that they know how to get their message out and take marketing and PR seriously. (25 percent) 9. What does their future product/service roadmap look like? (5 percent) 10. Where are they located? (Startups based in Silicon Valley, Boston, Austin, NY, etc. earn more points than startups in the hinterlands for a number of reasons, including access to capital and talent.) (5 percent)

Jeff Vance is a freelance writer based in Santa Monica, Calif. Connect with him on Twitter @JWVance or by email at jeff@sandstormmedia.net.

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