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
Ron Miller / TechCrunch :
Context & Ripple Effects
In September 2018, Packet raised a $25M Series B led by Third Point Ventures to scale bare metal cloud hosting — dedicated physical servers delivered with cloud-style automation — positioning itself directly against AWS and Azure's virtualized public clouds. The bet was that some workloads want raw hardware without the hypervisor tax.
The arc validates quickly: within sixteen months, colocation giant Equinix announced it was acquiring Packet, and by March 2020 it had closed the deal at $335M — roughly fourteen times the startup's total venture funding. A hyperscaler challenger ended up as the software layer inside the world's largest interconnection landlord.
First-order effects
- Third Point Ventures' $25M gives Packet the balance sheet to expand bare metal regions and automation tooling while competing on price and hardware control against AWS and Azure's elastic instances.
- Enterprise buyers evaluating multi-cloud architectures gain a credible non-hyperscaler option for dedicated compute at cloud speeds.
Second-order effects
- Equinix, whose colocation business rents space and power but not automated compute, responds by buying rather than building — acquiring Packet to attach an on-demand bare metal layer to its data center footprint.
- The acquisition pressures other colocation operators to decide whether they too need a compute-orchestration capability or will remain landlords beneath the clouds they host.
Third-order effects
- The Packet-to-Equinix path prefigures today's capacity-aggregation models like Amp's $1.3B play to buy excess data center compute and resell it: physical infrastructure owners keep capturing the monetization layer above their racks.
- If the pattern holds, independent bare-metal challengers become acquisition targets for whoever owns facilities, concentrating cloud economics back into the hands of data center operators.
The trend: Cloud value is migrating back toward physical capacity owners, who increasingly acquire the orchestration software needed to sell raw hardware as a service.