Application virtualization or containers is seriously threatening the dominance of traditional OS level Virtualization. In a Survey done by ETR, Docker is growing faster than anything ever seen in history of ES. In fact, as of April 2015 Docker was at 97% usage and purchasing intention by enterprises.
The numbers for Docker’s project growth stats are shocking as well. In the past year alone, the project has experienced a 183% increase in contributors, 515% growth in projects on GitHub, and an astounding 18,082% spike in container downloads.
Container technology was in use for years, with companies like google using it in their data center for the last decade, but then came Docker. Docker is an open source project that automates the deployment of applications inside software containers. Docker did something simple butrevolutionary: they automated and massively simplified the whole process. in simple language, Docker is a tool that can package an application and its dependencies in a virtual container that can run on any Linux server. Unlike full virtual machines though, a Docker container does not include a full virtualized OS, but rather shares the OS of its host.
The Eco-system around containers is developing quickly. Docker has done fantastically at making containers appeal to developers, and the next stage is to disrupt production. Many small companies are using containers already on public clouds, but in order for containers technology to seriously threaten OS level virtualization, some components are still missing. Partly because the eco-system around containers is still very young, but also because containers are a different animal, and new technologies need to be developed in order to solve the regular issues in developing, testing, deploying, managing, monitoring and securing containers. There is plenty of room for innovations in this space, although many areas are already covered by startups.
Webelievethat we are at the beginning of a real disruption in the virtualization world, and that containers arequickly going to becomethe preferred environment to run an application. Areas in which we are interested are: networking, storage and security for containers. If you are developing something around containers, please give us a call; we would love to learn more.
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For years there was a common belief amongst venture capitalists that participating preferred is always better for investors.Here’s a brief overview of the various liquidation preferences investors may ask for:
VCs have one common goal - they all aim to increase shareholder value. Luckily, many Israeli entrepreneurs share this dream as they want to build long-lasting companies. This alignment of interests between VCs and entrepreneurs is crucial to make sure all shareholders are working to achieve the same goal.
The problem with participating preferred is that it creates an inherent misalignment of interest between VCs and entrepreneurs.
Take for example an entrepreneur, who raised $21M and is subject to participating preferred plus interest rate . This entrepreneur is now faced with a decision whether or not to sell the company for $80M. The shareholders agree that the company’s potential could be much higher in 2-3 years, but the company would have to raise another $20M in order to reach said potential.
Luckily, there is a late stage VC who is eager to invest in the company at a reasonable valuation (i.e. - $120M pre money). The decision, therefore, should be simple - on the surface this a good opportunity to increase the value of the company at a reasonable price. But here is where the participating preferred misalignment kicks in. For the entrepreneur, raising another $20M means that upon an exit, he/she will have to pay back the investors $41M plus interest before seeing any profits. If the entrepreneur suspects that the chances of substantially increasing the value at exit are not high enough, he/she will be hesitant to bear more risk. In order to match the entrepreneur's current return, the next potential exit would need to be at least $200M, in order to compensate the extra dilution from the D round and the added preferences. As such, many entrepreneurs at this stage will decide to sell the company and reduce their personal risk. The loss of potential value for all shareholders in this scenario could be huge, by far exceeding the potential profit stemming from the participating preferred.
Cloud computing is an area we find especially exciting. It has brought enormous change to the world of applications and it would be no exaggeration to say that most of the innovation in IT over the past decade has been enabled, catalyzed, or caused by cloud computing. Currently, we are in the midst of a microservices revolution, one that has, until now, been championed by containers. Through our investment in Aqua Security over a year ago, we have witnessed first hand the rapid growth this market is experiencing, and believe it will continue to proliferate enterprises across the globe. We are now on the cusp of another revolution in cloud infrastructure: the move to serverless computing.