SoftBank leads $9.4m funding round with cloud startup Packet

Cloud startup Packet has raised $9.4 million with backing from SoftBank in a partnership that will expand the startup's presence across Asia and Australia through a datacentre in Tokyo.

New York-based public cloud startup Packet announced on Wednesday it has raised a $9.4 million Series A funding round led by Japanese telco giant SoftBank Group.

In addition, the companies have formed a strategic partnership to bring Packet's bare metal server automation technology to Japan.

Packet will also establish its fourth public datacentre in Tokyo, which will offer connectivity to Japan, China, as well as the rest of Asia and Australia. With datacentres already in New York, Silicon Valley, and Amsterdam, the company said the move to Japan's enterprise market marks a step forward for the company.

"Packet's team has built an incredible solution and has already captured the attention of a wide set of partners and clients in North America and Europe," said Eric Gan, EVP head of Business Development at SoftBank. "We look forward to working together to extend their reach in Asia."

The funding deal means the company can grow their engineering and network teams, and the results should be seen in their next major products and features, it said. Packet, founded in 2014, offers public cloud style automation through bare metal servers.

"As one of the most forward-looking investors in the world, SoftBank is a natural partner for our vision of automating fundamental infrastructure, no matter where it is," Zachary Smith, Packet's CEO, said.

"In a market dominated by giants, we feel that a bold partner comfortable with challenging the status quo is exactly what we need to aggressively expand our current momentum in the global cloud marketplace and bring our infrastructure automation expertise to private datacentres."

The company previously partnered with Mesosphere to easily deploy a DC/OS cluster on Packet bare metal, and also launched Tectonic, the enterprise Kubernetes solution, with CoreOS.

DH Capital served as Packet's financial advisor on the transaction.

The deal follows SoftBank Group's acquisition of the UK's ARM Holdings for £24.3 billion back in July, with SoftBank looking to use ARM's semiconductor expertise for its Internet of Things division.

Also this year, SoftBank reported it would sell around $7.9 billion worth of shares in Alibaba to pay off debts. The pair announced a joint venture last month to launch a cloud company SB Cloud in Japan to bring Alibaba Cloud's technology to Japanese businesses.

Correction 4:47pm AEST September 15, 2016: Packet's partnership with Mesosphere amended as a separate entity to that with CoreOS to deliver Tectonic.

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