The funding behind 6 top Ruby on Rails hosts

Posted by Collin on 06/01/2011 in Rails Hosting Information, DreamHost, 1and1, Heroku, Engine Yard, Joyent, and Rackspace.

Starting a new company? Ever wonder where your Rails host got its start? We looked into the backgrounds of several top Rails hosts to find out what started the machine, and what keeps it greased. It’s interesting to note that most (if not all) of the bigger hosting companies don’t have much financial history information readily available.

  • Heroku: Founded in 2007, Heroku was originally provided $20,000 in seed funding through Y Combinator in 2008. Heroku later raised $3million in Series A funding from Redpoint Ventures in 2008, and then $10 million in Series B funding in 2010 led by a company called Ignition Partners, shortly before being acquired for $212 million in cash by An acquisition that is expected to close in Q4 of fiscal year 2011.

  • Engine Yard: Founded in 2006 by 3 men with the vision of becoming the best fully managed Rails/Ruby hosting company, Engine Yard has since become a thriving force in the Rails hosting community. In early 2008 Engine Yard received $3.5 million in Series A funding from Benchmark Capitol. In 2006 they received $15 million in Series B funding from NEA, Amazon, and Benchmark Capitol, and in 2009 Engine Yard received $19 million in Series C funding from DAG Ventures, Presido Ventures, Bay Partners, Benchmark Capitol, NEA, and Amazon companies. A total of $37.5 million for “company expansion”.

  • Rackspace: Rackspace was created and launched in October 1998. The firm received funding from Norwest Venture Partners and Sequoia Capital in 2000. Rackspace listed their IPO in 2008. The IPO wasn’t well received and lost almost 20% in value after the listing. Currently however the stock is up almost 150% and Rackspace boasts over 16 million customers worldwide. Rackspace is currently worth upwards of $1.45 billion dollars according to Techcrunch.

  • Dreamhost: Dreamhost is an employee owned company. The company was started by three guys fresh out of high school as a web design network. Dreamhost has never had any funding to speak of, it has been built from the ground up by time and money investments from its employees and founders.

  • 1&1: 1&1 started as a small German marketing company. In 1988 they took over marketing activities for a company called BTX. in 1998 1&1’s parent company, United Internet, became one of the first web companies to go public. IPO proceeds of around $60 million were used to finance and further the growth and development of 1&1. 1&1 currently has over 10 million customers worldwide and is continuing to grow.

  • Joyent: Joyent has been a global cloud computing service provider since 2004. Joyent is a private company backed by Greycroft Partners and Intel Capital. Joyent was started with an early seed capital investment by Peter Thiel, and other friends and family. Up until 2009 when Joyent received Series A funding from Intel Capital (specific amount not known) , it had been fully funded through product revenue. In 2007 they raised an additional 7 million dollars to fund its cloud computing platform, and then again in 2010 they received an additional $15 million in Series C funding from Intel Capital. During the course of their years in business Joyent has also acquired two companies, Textdrive and Layerboom. Textdrive was acquired in an effort to gain “the full stack” by gaining an ASP platform. The acquisition of Layerboom is part of Joyents apparent move to assemble the world’s leading engineers in cloud computing.