Toronto cloud provider bought by Virtustream

One of the earliest cloud computing companies in the country is to be bought by a U.S. provider with ties to Intel Corp.

Toronto’s Enomaly Inc. is being taken over by Virtustream, a Bethesda, Md.-based cloud computing provider for an undisclosed price. The terms of the deal haven’t been finalized yet, but Virtustream said in a release today that it has entered into a definative agreement to buy the Canadian company. The deal is expected to close in the first quarter of next year.

Enomoly founder and chief technology officer Reuven Cohen (pictured) said this morning that he and most of the staff of 15 will be staying with the company.

Among the investors in Virtustream is Intel [Nasdaq: INTC], which Cohen said made the introduction that lead to negotiations for the take-over.

“I’m told this is a relatively fast acquisition,” Cohen said. “It’s been in the works for a couple of months.”

Cohen has been a vocal evangelist for cloud computing since Enomaly was founded eight years ago, offering its SpotCloud Marketplace Platform that sells unused cloud capacity to users who need it.

Among its customers are the U.S. government and many companies in China.

However, Cohen doesn’t have many regrets not being able to take Enomaly bigger by itself. “A startup in a sense is always for sale. They made an offer that certainly was hard to refuse. We’ve been organically building the company for eight years, focusing on doing innovative products and services in the cloud. This opportunity presented itself, and it was a really good opportunity.”

“I think this is great news for Canadians startups,” he added. “This is another proof point that you can start a successful business in Canada.”

SpotCloud allows public cloud service providers the opportunity to at least get something for that unused capacity. Even if it’s well below retail pricing, Cohen says, it’s better than getting nothing.

Enomaly built an intermediary platform on Google Inc.’s App Engine that distributes customer virtual machine images to cloud hosts with extra capacity. While the provider is actually offering infrastructure-as-a-service, the end result looks more like a platform-as-a-service offering, Cohen told IT World Canada in an interview last year. The company works with hosting providers, service providers, carriers and telecommunications companies to create regionalized compute clouds. Customers can then create their own cloud networks.
“I think one of the big drivers (of the deal) was the work we were doing in a federated marketplace,” Cohen said. “A big focus of ours was the ability to leverage multiple data centers and cloud providers in sort of  a federated way. That was a big part of what they were looking to do in their product feature set. The second big part of the equation was what we were doing in China. We’re seeing significant traction in the Chinese market, and the thing with doing business there is that who you know is very important, and we were very lucky to be well-connected in that market.”

As for Cohen’s future, there are still discussions on where he’ll fit in with Virtustream. He isn’t sure what he wants to do. “I spend a lot of my time on the road talking to people and sort of spreading the gospel of cloud. I’m going to have to figure out the specifics of how a founder relates to this (new) company. I think there’s definitely some technical things that I’m good at – driving conceptual products, development.”

In its news release Virtustream said it will delay the production launch of  Enomaly’s SpotCloud 1.0, which is currently in beta release with thousands of registered users, to enhance its robustness, security. Certain SpotCloud components will be added to Virtustream products.
The two companies have gone different routes in financing growth. Enomaly has grown organically with no venture capital — which, as Cohen pointed out, gave the company flexibility in its future. Virtustream has depended on venture investment. In July it announced a second round of financing from backers totalling US$10 million, which included Intel Capital, Columbia Capital, Noro Moseley Partners, and TDFunds.

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