Start FinOps finout ltd. stepped into the spotlight today, announcing that it just closed a $14 million seed funding round that brings its total amount raised to date to $18.5 million.
Finout said today’s Series A was led by Team8 Capital and included participation from investors including R Squared Ventures, Jibe Ventures and seed investor Ariel Maislos. Prior to this round, the company had raised $4.5 million in an unannounced seed funding round previously led by Pitango First.
Finout is looking to make waves in the so-called “FinOps” market, which is a portmanteau of the words “finance” and “DevOps”. As modern businesses today make extensive use of cloud-based computing resources and software-as-a-service-based applications, Finout believes there will be strong demand for its tools, which help businesses monitor, manage and ultimately reduce their cloud computing expenses.
As the company explains, enterprises are increasing their reliance on cloud services with usage-based pricing, where they are billed based on how much a service or application is used, as opposed to how many. users. Finout said the adoption of usage-based pricing has doubled over the past four years, adding that this figure will likely increase as more software vendors plan to adopt the same model.
Companies are more accustomed to the traditional “seat-based” pricing model, Finout explained, so moving to a newer model makes it difficult to manage cloud expenses.
This is where Finout thinks he can help. What it does is quite simple. It consolidates all of a company’s cloud spend, including infrastructure services, data warehouses, and content delivery networks from public cloud providers such as Amazon Web Services Inc. and Google Cloud, as well as as middleware from companies such as Twilio Inc. and Auth0 Inc., in a single “mega-bill”.
The mega-bill shows all of a company’s monthly cloud spend. Where it gets smart, though, is that it uses advanced attribution rules and virtual tagging to assign each invoice item to its business role, feature, team, and product. Additionally, it uses the most granular cost units possible, including native agentless Kubernetes support.
Finout said it can even correlate these costs to unit economics, which it does through external metrics and business data from third-party sources such as Datadog Inc., Salesforce Inc., and Looker. Using these tools, it can even add revenue data to show the profitability margin of each cloud service used by a business.
Armed with all this data, companies can then take steps to reduce their cloud-related expenses, cutting services that are not needed, or perhaps increasing their use of others to generate more profits. Finout quoted a case study with a marketing intelligence firm Singular Labs Inc.who adopted their platform and were able to quickly reduce the number of hours their teams spend on cloud engineering and monitoring.
Finout Co-Founder and Managing Director Roi Ravhon said that in the long term, the most significant cost reductions are those achieved at scale, and hinted at the significant cost savings to be achieved by consolidating everything in a single mega-bill.
“If you cut costs by 20%, that’s admirable, but it’s just a quick fix,” he said. “To truly optimize costs and achieve better margins, companies need to measure rising costs against the business so they can make informed decisions and ensure engineers will take action.”
Cloud cost management has become a major concern for businesses lately, and many competing services have sprung up to help solve these headaches. Earlier this month, another startup called Kubecost announced an open-source project called OpenCost that provides cost monitoring and optimization for Kubernetes environments.
Infrastructure providers are also getting in the game. Last year, NetApp Inc. acquired a company called CloudCheckr Inc., which analyzes costs across Amazon Web Services, Microsoft Azure, and Google Cloud.
However, Team8 managing partner Liran Grinberg said there is no cloud cost optimization platform specifically aimed at increasing usage-based cloud pricing.
“Managing cloud profitability is a board-level priority, which is why we’re so excited to lead this cycle,” Grinberg said. “Finout is uniquely positioned to enable cost control on cloud platforms by providing an out-of-the-box solution that enables the modern cloud-based enterprise to achieve their FinOps goals.”