Scale Computing scores $34.8M round of funding, plans to add 100-plus employees

Indianapolis-based Scale Computing Inc. has landed one of the biggest rounds of funding in Indiana in recent years and is planning to more than double its workforce over the next two years.

On Thursday, the fast-growing information technology company announced it would complete a funding round of $34.8 million by the end of this year. 

The investment, Scale officials said, will fund the continued expansion of its international sales and marketing activities, broaden its channel partner program and accelerate the product development of its edge computing platform.

The company—which has its headquarters in The Union 525 building in downtown Indianapolis—has 106 employees, with 62 in Indianapolis. 

Scale is planning to add 100 employees over the next year, and an additional 40 to 50 in 2020, company officials said.

To accommodate all investors in the round, Scale Computing’s funding has will have multiple closings, including $21.2 million in a first close. The remainder of the oversubscribed round will close by end of 2018, company officials said.

Since its founding in 2007, the company has raised a whopping $104 million in capital. 

The largest investor in this round—which company officials are calling its Series F round—is Lenovo, which last week announced a global partnership with Scale. New and existing venture and equity investors also participated in the round. 

“Scale is a company which has exceeded its plans for more than two years,” Don Aquilano of Allos Ventures, who led Scale’s Series A and also participated in this investment round, said in a written statement. “We are absolutely thrilled with the company’s performance and market leadership as edge computing moves to the forefront of IT. No company is better positioned to take advantage of this global trend.”  

Scale sells box-sized IT infrastructure that can handle an enterprise's networking, data storage and virtualization needs. 

Although many companies are moving data and applications to the cloud, or servers run by a third party, some firms still prefer to have their own private servers and data repositories. Some companies use both. Furthermore, industry experts said, Scale’s offering can work alongside cloud-based storage technology and can even enhance that technology.

Scale’s patented HyperCore technology identifies, mitigates, and corrects infrastructure problems in both hardware and software in real time, using machine intelligence and automation to keep applications running without human intervention.

Fueled by the growth of edge computing and the desire to bring automation to IT systems, Scale’s revenue has more than doubled over the past two years, with sales in the retail sector up four times, closely followed by other distributed enterprises, Scale officials said.  

Last year, Scale officials told IBJ the company had about 2,000 clients and boasted eight-figure annual revenue, which grew 68 percent in 2016. 

In the wake of announcing an $18 million funding round in July 2015, Scale officials said the company was pursuing profitability, but that hasn't happened yet. The company said it expects this to be the last funding round before reaching profitability.

The retail sector has been a big one for Scale, industry experts told IBJ, due to the need of retailers to have their servers operate with a near 100-percent reliability. Any malfunction in servers can have an almost immediate impact to the bottom line in retail, those experts explained.

Scale recently landed several key clients: Ahold Delhaize, a global supermarket retailer with nearly 7,000 stores; Genting Group, the third largest casino company in the world; Jerry’s Enterprises, a large North American food retailer; and Farm Bureau Insurance.  

“What makes Scale unique is that it really is a set-it-and-forget-it platform. It just takes care of itself,” said Jeff Miller, IT director for Jerry’s Enterprises, a Scale customer operating 50 retail stores across the United States. 

“We have experienced tremendous growth over the past two years, driven by our unique capability to completely automate the administration of a fully converged platform,” Jeff Ready, CEO of Scale Computing, said in a written statement.  “This round of funding, combined with our new partnership with Lenovo, enables us to instantly reach customers at a global scale.”