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Lenovo investment pushes Scale Computing closer to edge

Scale Computing CEO Jeff Ready said the hyper-converged vendor was on the edge of profitability before it decided to expand its edge computing sales.

Scale today said it has secured $21.2 million in funding, with another $13.6 million coming by the end of the year. The $34.8 million in new funding – led by strategic partner Lenovo – brings Scale’s total funding to $95.8 million.

It was Scale’s first funding since an $18 million round in 2015, and Ready said he was working to bring the Indianapolis-based hyper-converged pioneer into the black.

“I’m not from Silicon Valley,” he said. “I want to run this as a real business. I was on a plan that said, ‘Let’s make a profitable company.’ We were close. But we’ve decided to take a step back and invest more and push out profitability out a little bit, probably around a year. This opportunity was not expected two years ago.”

Scale started selling non-VMware based hyper-convergence to SMBs in 2012, putting it on a separate track from most early hyper-converged players. That is still the bulk of its business, and Ready said Scale has more than 3,000 customer deployments. But it has discovered a lucrative market of selling to companies in industries such as retail, healthcare and manufacturing, which have many small sites with little or no IT staff. Ready said Scale’s software and appliances are a good fit in these edge sites because they are easy to manage and have self-healing capabilities.

“SMB is still our bread and butter, and it’s why we’ve ended up positioned so well for edge environments,” he said. “They look like most of our SMB customers, with zero, one or maybe two people on site. They need applications to run and take care of themselves and prefer something that encompasses the entire infrastructure stack. They need a system that runs itself, they have no people or expertise locally to babysit them.”

There is one big difference between SMB and edge customers, though. The companies with many small sites also need central management for all of them. Ready said Scale manages hundreds of clusters as one large storage pool.

Scale isn’t alone on the edge, though. VMware claims it signed a deal with a retailer to install vSAN hyper-converged software on Dell EMC VxRail appliances across 1,200 stores this year.

Ready said he has considered VMware his main competition from the start, mainly because Scale gives customers the option of not using VMware.

“VMware inevitably will be our main competitors,” he said. “I’ve always considered VMware to be the main competitor.”

Ready declined to say how many employees Scale has, but said it’s “in the hundreds” and will add a least one hundred more over the next year. Many of those will come in the sales, marketing and channel teams. He is also counting on Lenovo to expand Scale’s market reach. Scale and Lenovo this month launched a formal partnership to sell an appliance with Lenovo servers running Scale’s HC3 Edge platform.

Allos Ventures, a Scale investor since its A Series round, also participated in the F Series funding. Ready said most of Scale’s other previous investors are also involved in the current round.