Cloud-native cost control startup Cloud Capital Technologies Holdings Inc. said today it’s ready to help enterprises keep a lid on their cloud infrastructure spending after raising $7.7 million in funding.

The funding comes via an initial $2.3 million pre-seed round led by Connect Ventures that was closed three months prior, and a new $5.4 million seed round led by Backed Ventures and Middlegame Ventures, with participation from DFF Ventures and a number of angel investors.

Cloud Capital says it has developed the first cloud-native fintech platform, designed to help companies forecast cloud infrastructure usage and unlock savings by optimizing how they use that infrastructure and taking advantage of savings opportunities.

The startup says there’s an urgent need for superior cost control due to the growing adoption of artificial intelligence applications, which mostly live in the cloud. The analyst firm Canalys says cloud spending hit an annual run rate of $344 billion in the fourth quarter of last year, growing by more than 20% from a year earlier. At this pace, it expects cloud costs to surpass $1 trillion a year by 2030.

For enterprise CFOs, this is an urgent matter. As Cloud Capital explains, cloud infrastructure is now the second-biggest cost for most software companies after paying their staff’s salaries, accounting for 6% to 12% of the average software-as-a-service businesses’ revenue, according to its own research. For AI-native companies, cloud costs are generally even higher, as high as 30% to 40% of revenue, it says.

Other studies show that 27% of software companies are exceeding their cloud budgets, while 40% of potential savings offered by cloud providers go unrealized. Cloud Capital says this stems from the lack of any suitable tools that can help companies to properly forecast and manage their cloud expenses.

Cloud Capital’s platform aims to close this gap. By combining real-time data on cloud usage with engineering plans and financial models, it says it can accurately predict a company’s cloud spending and identify safe, commitment-free savings opportunities. And for businesses that are ready to make a long-term cloud infrastructure commitment, it goes even further by underwriting the risk associated with long-term contracts, absorbing any liabilities on its customers’ behalf.

Cloud Capital co-founder and Chief Product Officer Zack Liscio said that in order to try and realize savings, CFOs are being asked to approve major cloud investments without any ability to control or manage the risk associated with such deals.

“Cloud has always been a massive cost, but with AI workloads driving usage through the roof, it has become the fastest growing and least controlled line item on businesses’ profit and loss statements,” he said. “We built Cloud Capital to give them the tools they need to forecast spend, manage risk, and make smarter decisions.”

Chief Executive Edward Barrow stressed that he and his co-founders have plenty of experience in solving these kinds of problems. He previously worked with Liscio and Cloud Capital’s chief technology officer Spencer Pingry at a company called Optimizely Inc., where they first experienced the complexity behind spiraling cloud costs. He said that between the three of them, they have managed more than $500 million in cloud spending, and are familiar with all of the reasons as to why such costs quickly escalate.

“We believe cloud infrastructure is the largest broken market in tech,” Barrow said. “We’ve been in the driving seat, we’ve built forecasts and we’ve lived the pain. So we built Cloud Capital to give CFOs the same level of control over cloud that they have across the rest of the profit and loss statement.”

Prior to today, Cloud Capital said it was operating in stealth mode, helping dozens of high-growth startups in industries such as AI, cybersecurity and finetech keep a lid on their cloud costs. It says these early adopters have already generated significant savings using its platform, which is now generally available.

Connect Ventures Partner Rory Stirling said he invested in the company because he knows there’s an urgent need for the financial control over cloud infrastructure that the startup provides. “We backed this team because they have lived the problem and they are building with a clarity and conviction that only comes from first-hand experience,” he added.

Photo: Cloud Capital