This week cloud connectivity company, Kong, announced the closing of their latest funding round. The $100M Series D round was led by Tiger Global Management with participation from previous investors including Index Ventures, CRV, GGV Capital, and Andreessen Horowitz. The new capital, Kong says, will be used to expand go-to-market operations while also continuing the roll-out of Kong Konnect, Kong’s full-stack Service Connectivity Platform.
Why this transaction?
The York IE team chose this as our transaction of the week to discuss the change in modern enterprise applications with the rise in microservices and software containers. With digitization continuing to increase, enterprise applications are no longer being built with monolithic code but rather as connected applications built on dozens of microservices. As this age of connectivity continues, enterprises need a platform where they can communicate with and monitor the data flowing through these microservices-based applications. Kong looks to address these communication challenges with their own Platform-as-a-Service (PaaS), Kong Konnect, a connectivity platform designed for cloud-native applications. Konnect acts as a communications layer that companies can use to process the data flowing among their applications, all while monitoring their data via a centralized dashboard. In their press release, Kong announced that in 2020 they had tripled their SMB customer segment; this accelerated growth makes sense given the widespread adoption of cloud computing across nearly every industry. As businesses continue looking for ways to digitize their organization, cloud computing via PaaS has become an increasingly popular option given its scalability.
Growth in Connectivity
Today, more and more companies are utilizing cloud computing as enterprises continue to digitize, becoming more connected in the process. Making the switch from on-premise software to cloud computing gives organizations scalability, allowing them to expand while also saving money in maintenance costs. Due to the COVID-19 pandemic, many organizations have accelerated their digital strategy and turned to cloud computing. Knowing these factors, the York IE team wanted to see just how much growth the cloud computing market has experienced looking back about ten years, the graph below is based on the data we collected:
As you can see funding for cloud computing related companies has been on the rise since nearly 2012, reaching a peak in 2016. The graph also depicts what we would consider being the build-up of the second wave in funding for cloud solutions; this is likely directly related to the increased adoption of cloud computing across industries, including adoption from small businesses looking to digitize their operations.
