Aiven raises new funding as cloud data service demand grows

The growing market for cloud database-as-a-service platforms is a driving force behind the growth of data streaming vendor Aiven.

Aiven, based in Helsinki, said on Oct. 19 it raised $60 million more in new funding that follows the $100 million it raised in March. The vendor said it will use the new money to expand its global operations.

Founded in 2015, Aiven has built a cloud platform that provides a series of different open source database technologies as a service. Among the managed data services that Aiven supports are Apache Kafka, Cassandra, PostgreSQL and Redis.

In this Q&A, Oskari Saarenmaa, CEO and co-founder of Aiven, outlines how the market for open source databases as a service has progressed in 2021.

Why are you now raising more money now?

Oskari Saarenmaa

Oskari Saarenmaa: Our investors are really excited about all of our progress and wanted to double down on Aiven.

It's good to also make sure that our balance sheet can sustain us for longer, so we can push back our future fundraising plans.

We get compared a lot to Confluent, which recently had its IPO. Confluent was built around supporting Kafka, and Kafka is also the biggest product for us by revenue. So, when people are looking at us, they're often comparing us to Confluent. Since Confluent went public and has been doing very well in the stock market, I think that that was a big factor for the excitement for Aiven as well.

Where are you seeing demand for Kafka and cloud streaming data services?

When people are looking at us, they're often comparing us to Confluent. Since Confluent went public and has been doing very well in the stock market, I think that that was a big factor for the excitement for Aiven as well.

Saarenmaa: There are several different areas where we see potential customers for our Kafka service.

There are medium to large established corporations out there that are already generating lots of data and have built very sophisticated and complex data processing systems around their data. Those companies are really feeling the pressure to move faster. They want to go into real-time event processing to be able to react to the changes in the business much faster. That has especially been happening in the retail space, where we have a lot of larger customers.

The other type of customers we see for Kafka are digital-native companies like food delivery services. Those services need to be able to move very quickly in the markets that they are serving.

When a company is building on Apache Kafka, they are basically considering several  options. One is just doing everything in-house. A lot of our customers have been at least toying with the idea of running Kafka on their own. Most of the time when companies want to actually go to production with Kafka, they don't want to self-manage and maintain it. So they need to look at other options.

Some of the time our customers are already running in the cloud on AWS, Google or Microsoft Azure and they look at the native offerings from those providers. For different reasons, they realize that can't get what they want from the cloud providers or are concerned about being locked into proprietary tools, so they look at different Kafka vendors.

When companies are comparing us to Confluent and to offerings from the public cloud vendors, the conversation tends to be about features, support, pricing and performance.

What has changed in the open source DBaaS market for Aiven this year?

Saarenmaa: More and more companies are now comfortable with running databases in the cloud, though in Europe and in the U.S. there are a lot of companies that are still running databases in private data centers rather than in the cloud. In 2021, I have seen the adoption of the cloud accelerating. A lot of companies are now looking to be more efficient and wanting to shift a lot of the Capex [capital expenditures] into Opex [operational expenditures].

This year has also kind of reinforced the point that you can build very successful companies where everybody is working remotely. We went into the pandemic last year as a team of around 40 people working out of our offices in Berlin, Helsinki, Sydney and Boston. As the pandemic kicked in and the lockdowns prevented people from going to the offices, we also saw that we didn't need to limit our growth to four cities and we could just hire people where they are.

We've added more than 200 people since the pandemic and we're finding it very beneficial for us as a company and for many of our employees to stay wherever they are living and still work for a rapidly growing global software company.

Editor's note: This interview has been edited for clarity and conciseness.