The infrastructure-as-a-service industry continues to face significant headwinds, as evidenced by the recent shut down of D2iQ. Formerly known as Mesosphere, D2iQ raised $250 million in venture funding to become a leading provider of Kubernetes and cloud native technologies. However, despite its promising technology and funding, the company has become the latest venture-backed startup to dissolve.
This failure highlights the ongoing struggles many enterprise infrastructure companies face in competing with the dominant cloud providers. Even with strong technology and significant financial backing, it can be incredibly difficult to gain traction in a market increasingly controlled by giants like Amazon, Microsoft, and Google.
D2iQ Acquired by Nutanix, Price Unknown
- D2iQ co-founder and most recent CEO Tobi Knaup now lists Nutanix as his employer on LinkedIn since November, signaling an acquisition.
- The purchase price Nutanix paid to acquire D2iQ remains confidential. Though in 2020, D2iQ discussed selling to Google for over $250 million—the amount raised from high-profile investors.
- Those investors include Khosla Ventures, Andreessen Horowitz, Koch Disruptive Technologies, and T. Rowe Price. It remains unclear if they profited from Nutanix’s acquisition.
- Since neither company has publicly commented, the reasons for the acquisition and D2iQ’s shutdown after 14 years remain uncertain. D2iQ focused on commercial open source software and services for Kubernetes containerization technology.
The demise of D2iQ is unlikely to be the last disappointing outcome in the IaaS space. However, it does further indicate just how vital early revenue growth and clear competitive differentiation is in order to thrive over the long run amidst dominant rivals. For enterprise infrastructure startups, the path ahead will undoubtedly be filled with further uncertainty and challenge.
Interestingly, D2iQ’s shut down comes only over a year after Microsoft formed a partnership with the company. In 2021, Microsoft announced that it would offer D2iQ’s services on the Azure Marketplace, making it easier for Azure customers to deploy and manage D2iQ’s Kubernetes platform. Microsoft likely saw D2iQ as an opportunity to expand its cloud native capabilities and appeal to development teams already using D2iQ’s technology.
However, this partnership was clearly not enough to salvage D2iQ’s struggling business. It seems Microsoft was more interested in the technical capabilities rather than investing significantly in or acquiring the company outright. While we don’t know the full extent of discussions between the two firms, Microsoft’s arm-length approach to the partnership suggests that it saw weaknesses in D2iQ’s financials or long-term independent viability early on. With Azure continuing its rapid growth, Microsoft perhaps determined that an expensive acquisition or deeper investment was unnecessary when it could simply replicate D2iQ’s functionality.
Either way, despite Microsoft’s stamp of credibility, it could not prevent this promising vendor from shutdown. D2iQ’s failure reinforces the idea that while strategic partnerships can aid growth, sustainable business fundamentals are ultimately what matter most.
D2iQ IPO
D2iQ was a San Francisco-based company that developed a cloud native platform for deploying and managing Kubernetes in multi-cloud environments. Founded in 2013, D2iQ has raised over $100 million in funding from investors like Andreessen Horowitz, Kleiner Perkins, and T. Rowe Price.
In October 2021, D2iQ raised an undisclosed amount of funding from private equity investors in its 7th round of funding. This latest cash infusion comes on the heels of strong customer growth and increased demand for D2iQ’s Kubernetes management platform as organizations accelerate their cloud native transformations.
With over 250 employees and a valuation likely in the hundreds of millions, D2iQ is emerging as a leader in the red hot Kubernetes and cloud native space. The company’s platform aims to simplify Kubernetes deployments, management, and operations through its proprietary technology called the D2iQ Kubernetes Platform (DKP).
As more mission-critical applications move to the cloud, the complexity of managing Kubernetes environments increases exponentially. D2iQ was well positioned to capitalize on this growing need with DKP’s easy-to-use control plane, intelligent automation capabilities, and enterprise-grade security and governance.
Their substantial funding, blue-chip customer base, and the soaring market demand for Kubernetes solutions had made them an attractive IPO candidate.