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The round is notable for a few reasons. For one, it is believed to be one of fewer than a handful of Berkshire’s startup investments in its 40-year history. It also takes 5-year-old Vapor IO’s total funding to “well north of $100 million,” according to the Austin-based company. And, it’s in part a reflection of the caliber of its customers. Namely, the recently public Cloudflare has inked a deal with Vapor IO to roll out its cloud services across 36 U.S. cities on the startup’s Kinetic Edge platform.
So exactly what is its Kinetic Edge platform?
Vapor IO historically focused on designing software and hardware for micro data centers and edge computing. But as of late, it has created what it describes as the “the first nationwide platform for edge colocation and networking services.” Its Kinetic Edge Exchange platform, also known as KEX, provides a new way of allowing network operators, application developers and content providers to connect at the network edge. This will help operators further cut down on latency and costs, according to the company.
Vapor IO’s previous backers include Goldman Sachs and Austin-based AVX Partners. The company won’t disclose how much it raised in its Series A and B rounds other than to say its current total funding is “well north of $100 million,” as mentioned above. Crown Castle, which is also a customer, led Vapor IO’s B round in June 2017. The first tranche of this Series C closed in September 2018 for an undisclosed amount. The company declined to say at which valuation this new capital was raised.
During a phone call, Vapor IO’s chief marketing officer Matt Trifiro elaborated on the company’s recent pivot. He told me that Vapor IO had designed technology that allowed it to build micro-modular data centers, selling that technology to existing data providers. But in 2017, Vapor IO formed a partnership with Crown Castle, which owns an estimated 45,000 cell towers, to build a nationwide network for edge facilities. In November, Vapor IO announced its KEX service. Today, that’s live in four cities: Chicago, Pittsburgh, Atlanta and Dallas.
In other words, Vapor deploys physical infrastructure at the network edge, which then hosts the clouds which do things like power SaaS platforms in these locations.
With the new capital, the company is “empowered to roll out its kinetic edge platform to the top 36 U.S. markets over the next 24 months,” Trifiro told me. “And we’ll be rolling it out to multiple sites in every one of those markets.”
Vapor IO currently has another 16 markets in pre-construction, most of which it plans to build out in 2020.
And for our technical readers out there:
The agreement is “major validation” for the work Vapor IO has been doing, according to Trifiro.
“They’ve committed to rolling out to all 36 cities with us,” he told Crunchbase News. “It’s a very big deal.”
Vapor IO currently has just under 50 employees and naturally plans to do some hiring with its new funds.
The news also marks another funding win for Austin. Startups in the Texas capital raised a record amount of venture dollars (and became a top 10 U.S. venture market) in 2019, as I reported here last week.
Note: This headline was updated post-publication to refer to Cloudflare as a partner, rather than a customer.
Illustration: Li-Anne Dias