DigitalOcean, the cloud infrastructure provider, has taken a step in bolstering its product offerings to include AI and ML platform offerings for its customers. The company announced its acquisition of Paperspace, a leading cloud infrastructure entity known for highly scalable GPU-accelerated applications.
The acquisition is expected to be worth $111 million in cash. This strategic move signifies a critical milestone for DigitalOcean as it further expands and enhances its product portfolio to bring AI and ML capabilities to its customers.
DigitalOcean is known for its simplicity and developer productivity. Compared to other public cloud providers, DigitalOcean managed to keep its infrastructure and platform services simple and accessible to developers. Paperspace, a platform well-known for its AI and ML capabilities driven by powerful GPUs, enables customers of DigitalOcean to use the cloud in new ways. It offers the training, building, and scaling of machine learning models.
Paperspace was founded in 2014 by University of Michigan graduates Daniel Kobran and Dillon Erb. The company, which is backed by Y Combinator and one of DigitalOcean’s co-founders, Jeff Carr, runs its own data centers with custom-configured GPUs. Paperspace had previously raised $35 million from investors such as Battery Ventures, Intel Capital, SineWave Ventures, and Sorenson Capital.
The reason for acquiring Paperspace lies in the growing demand for AI and ML cloud solutions. The advent of large language models (LLMs) has sparked the interest of developers, small businesses, and startups worldwide. However, these smaller entities often confront daunting financial and technical barriers when venturing into developing new AI and ML applications. By integrating Paperspace’s GPU-accelerated infrastructure, DigitalOcean now empowers its clients to meet this demand.
While some of DigitalOcean’s key competitors, such as Vultr, were actively investing in GPUs, the company had yet to offer GPU-based VMs and a hardware-accelerated AI and ML training platform. With the addition of Paperspace, DigitalOcean plugs a critical gap in its product portfolio.
Until now, AI/ML applications such as generative media, text analysis, natural language understanding, recommendation engines, and image classifications have largely been the domain of big enterprises. With Paperspace’s advanced capabilities combined with DigitalOcean’s simplicity, startups, SMBs, and mid-sized companies can now explore emerging technologies such as generative AI.
Paperspace’s pre-configured Notebook environments offer an excellent platform for experimenting with AI and ML models, while its streamlined workflow ensures a smooth transition from building models to hosting and scaling them for production.
For Paperspace customers, the acquisition opens up many of DigitalOcean’s cloud services, including databases, storage, and application hosting. Customers also gain access to DigitalOcean’s vast knowledge base, community-driven tutorials, and support system, aiding their journey to build and deploy AI applications.
The acquisition also brings Paperspace’s exceptionally talented team into the DigitalOcean fold, enhancing the combined entity’s focus on innovation and customer service. DigitalOcean and Paperspace will unlock new opportunities for SMBs and startups worldwide.
Paperspace will remain a separate business unit within DigitalOcean for the time being, and customers will not notice any immediate changes to their service.
The buzz around generative AI is forcing cloud providers to move fast in adding GPU-based infrastructure and machine learning platforms. The acquisition of Paperspace by DigitalOcean is a step in that direction.
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