According to IDC, projected spending on public cloud services is expected to reach $1.1 trillion by 2026, a significant increase from the current year’s $531.7 billion. However, as the use of cloud services continues to expand, organizations are facing increasing challenges in monitoring their compute-related expenditures.
Statista reports that approximately 82% of companies are currently grappling with the substantial challenge of managing their cloud spending effectively. Flexera’s data indicates that self-estimated wastage in cloud spending for this year stands at 28%, a slight improvement from the 32% reported a year ago. Nevertheless, the imperative to optimize costs and minimize waste remains critical, especially given the growing demand for compute-intensive technologies like artificial intelligence.
This predicament in cloud management has spurred the emergence of a new category of startups dedicated to providing solutions for monitoring and optimizing compute-related expenses. Highlighting the demand for such solutions, one of these startups, Exostellar, recently secured a $15 million Series A funding round led by Celesta and Cambium Capital, with participation from Alpha Intelligence Capital.
Tony Shakib, who assumed the role of CEO at Exostellar, stated that this latest funding round values the company at $40 million. He remarked, “The broader slowdown in the tech industry has created an even greater opportunity for Exostellar technology, as companies are increasingly focused on reducing their cloud infrastructure costs. Consequently, the company is well-positioned to capitalize on these trends.”
Exostellar, based in Ithaca, New York, was originally founded in 2018 by Cornell computer science faculty members Hakim Weatherspoon and Robbert van Renesse, along with their former PhD researcher Zhiming Shen, who now serves as Exostellar’s CTO.
Exostellar’s software is designed to dynamically allocate and move workloads in real time to the most cost-effective cloud infrastructure available. This software is application-agnostic and can seamlessly integrate with other popular resource management tools such as Slurm.
At its core, Exostellar’s software monitors variables like the current spot instance pricing offered by a specific cloud provider (currently limited to AWS) to predict when the provider might terminate an instance. When it anticipates an impending shutdown of a spot instance, Exostellar temporarily shifts the workload to a more expensive standard-rate cloud instance.
Additionally, Exostellar’s software aims to consolidate instances to the minimum necessary number, automatically adjusting their size and power to align with the current workload.
Shakib emphasized the impact of Exostellar’s technology, noting that it significantly reduces time to market for customers by increasing cloud infrastructure utilization without increasing overall cloud spending. By eliminating the trade-off between on-demand, reserved, and spot instance pricing, Exostellar empowers organizations to access the most cost-effective cloud pricing without committing to long-term financial agreements.
Despite the cloud spend management market, also known as FinOps, being highly competitive and poised to grow from just under $1 billion this year to $2.75 billion by 2028, Exostellar faces competition from vendors like NetApp-owned Spot.io, Cast AI, VMware’s CloudHealth, Apptio, nOps, and Zesty. To maintain a competitive edge, Exostellar plans to expand its platform to include additional public cloud platforms such as Azure, Google Cloud, and IBM Cloud, and introduce support for GPU instances (currently, Exostellar supports only CPU instances).
Shakib observed that the pandemic, while presenting challenges, also created opportunities. With most organizations operating primarily online, the demand for cloud application servers reached an all-time high, driving increased demand for Exostellar’s technology.
In line with this trend, a 2021 poll by Anodot, a startup specializing in cloud cost management and business monitoring, found that 91% of companies have moved their IT infrastructure to the cloud, with 50% planning to migrate additional workloads. Nearly half of the respondents cited over-provisioning and fragmentation of cloud assets among teams and suppliers as the root causes of their wasteful cloud spending, underscoring Exostellar’s growth potential, provided competitors do not impede its progress.
To date, Exostellar has raised over $20 million, exclusive of $2 million in grants from the Department of Energy and the National Science Foundation. The company maintains offices in both Santa Clara and Ithaca.
