Listen to this article
DigitalOcean, the cloud hosting company, has announced its acquisition of Paperspace, a New York-based cloud computing and AI development startup, for $111 million in cash. This acquisition marks a significant step for DigitalOcean in its journey to enhance its offerings and make complex cloud technologies more accessible to developers and businesses.
A Strategic Acquisition for DigitalOcean
Paperspace, co-founded by Daniel Kobran and Dillon Erb, graduates of the University of Michigan, has been a key player in the cloud computing and AI development space since its inception in 2014. The company initially focused on providing high-performance workstations for design, visualization, and gaming in the cloud. However, as AI became more mainstream, Paperspace expanded its offerings to include a suite of tools designed for developing, training, deploying, and hosting AI models in the cloud.
DigitalOcean CEO Yancey Spruill believes that the integration of Paperspace’s infrastructure and tooling with DigitalOcean’s products will enable customers to more easily test, develop, and deploy AI applications. On the other hand, Paperspace customers will benefit from DigitalOcean’s robust cloud services, including databases, storage, app hosting, documentation, tutorials, and a robust support system.
Paperspace’s Journey and Future Plans
Paperspace has raised $35 million from investors including Battery Ventures, Intel Capital, SineWave Ventures, and Sorenson Capital prior to the acquisition. The company has also received backing from Jeff Carr, one of the co-founders of DigitalOcean.
Despite the acquisition, Paperspace will remain a standalone business unit within DigitalOcean, and its customers won’t see immediate changes to their service. The company plans to continue its focus on AI and machine learning, aiming to unlock the endless possibilities of these technologies for developers and businesses alike.
DigitalOcean’s Growth and Future Prospects
This acquisition is DigitalOcean’s first since 2022, when it bought Pakistani cloud hosting service provider Cloudways for $350 million, and its fourth since its public stock listing in 2021. Despite some financial challenges, DigitalOcean continues to grow, with its revenue increasing by 29.7% to $165.13 million in Q1 2023.
As the demand for AI and machine learning solutions continues to grow, DigitalOcean’s acquisition of Paperspace positions it well to capitalize on this trend. The combined power of DigitalOcean and Paperspace could potentially unlock new opportunities in the cloud computing and AI development space, making these technologies more accessible to a wider range of customers.
