Packet, a New York City-based bare metal cloud hosting startup that is taking on rivals like AWS and Azure, raises $25M Series B led by Third Point Ventures
In a world where large hyperscale companies like Amazon, Microsoft and Google dominate the public cloud, it would seem foolhardy …
Context & Ripple Effects
Packet's $25M Series B, led by Third Point Ventures, is a bet that there is room beside AWS and Azure for a bare metal specialist selling raw, single-tenant servers as a cloud service. The round brought Packet's lifetime funding past the $36M mark that later coverage cites.
The arc that followed validates the thesis while ending its independence: within about sixteen months, Equinix announced it would acquire Packet announced it would acquire Packet, and by March 2020 had closed the deal at $335M — roughly nine times the company's total venture funding.
First-order effects
- The Third Point-led round gives Packet the balance sheet to buy servers and expand regions against AWS and Azure, whose scale is precisely the moat a bare metal upstart has to overcome.
- Customers wanting dedicated hardware without hyperscaler lock-in gain a funded alternative vendor right now, not a roadmap promise.
Second-order effects
- Equinix's response was to buy rather than build: acquiring Packet folded bare metal automation into a colocation giant's portfolio, turning a would-be rival into an upsell path for Equinix's own data center footprint.
- The $335M exit price signals to other infrastructure-adjacent startups (the same cohort as Containous's multicloud networking play) that strategic buyers will pay for capability layers sitting on physical capacity.
Third-order effects
- If the pattern holds, independent cloud-infrastructure challengers get absorbed by whoever owns the buildings — a structural shift from software-defined disruption toward facility-owner consolidation.
- The endpoint of that logic reappears years later in Amp's $1.3B raise to broker excess data center capacity Amp's $1.3B raise to broker excess data center capacity: compute supply increasingly trades as an asset class owned and intermediated by capital, not operated by venture-backed insurgents.
The trend: Cloud infrastructure value is migrating from venture-backed service layers toward the companies and funds that own physical compute capacity, with acquisitions like Equinix–Packet marking each handoff.