Engine Yard secures $3.5 million from Benchmark Capital

Adam Kalsey — Fri, 11 Jan 2008 19:07:58 +0000

Sacramento born Engine Yard has raised $3.5 million in venture funding from Benchmark Capital. The company, now located in San Francisco, still has data centers and several employees in Sacramento.

Engine Yard didn’t start out looking for funding. They are already profitable and didn’t see their Rails hosting and support business as lucrative enough to get the large payouts venture companies often require.

Benchmark Capital came calling after they continued to get pitched by startups that were using Rails as their technology. Benchmark saw that Engine Yard’s technologies might allow then to grow a software business to provide technology to Ruby on Rails startups. Engine Yard is one of the chief supporters of Rubinius, a high performance virtual machine for Ruby, and Merb a Rails-compatible framework that promises higher performance.

Much of the money will be used to accelerate development of these projects. Last month, Engine Yard hired the Rubinius core developers after hiring project lead Evan Phoenix last May. Engine Yard co-founder Ezra Zygmuntowicz is the lead developer of Merb.

This is Engine Yard’s first round of equity financing. They previously closed $2.5 million in lease financing to help build out more data centers.

Investment by locale

Adam Kalsey — Fri, 08 Dec 2006 01:30:01 +0000

At last week’s dinner we were talking about the realities of starting a company in Sacramento and getting outside investment. I’d recently seen a chart on Paul Kedrosky’s blog that shows investment by locale with the SF Bay Area getting a whopping 39% of investment dollars and Southern California and New England tied for second with 10% each.

It’s not clear from the graph what investments are counted (all VC, angel, public companies…?) but it’s clear that if you aren’t in the Bay Area you have an uphill battle when it comes time to raise outside investment.

I also wonder if the numbers are skewed somewhat by the locations of the companies that are seeking investment. Did 39% of investments go to the Bay Area because that’s where investors are looking or because there’s more startups in the Bay Area? If you’re in the Bay Area, is it perhaps harder to raise money because there’s more local startups? In Sacramento, you have a much smaller pond to play in.

There’s a couple of Sacramento-focused VC funds and a local angel group, not to mention a number of unaffiliated investors in the area. The fact that there’s less startups competing for their attention may make it easier to get in the door.

SacStarts - investment

Engine Yard secures $3.5 million from Benchmark Capital

Investment by locale