Serverless computing refers to applications and services that run on a third-party vendor’s off-site server platform (one example is Amazon Web Services’ Lambda Platform). Serverless computing distinguishes itself from physical in-house servers and cloud computing by how it handles scaling, or meeting variations in demand. With physical servers, scaling up means buying and maintaining new hardware, while with cloud computing it means renting more resources. In contrast, serverless computing allows automatic, real-time scaling of server resources based on actual usage.
Serverless computing is an evolution of cloud computing, a function-as-a-service (FaaS), with which it is often treated synonymously, since serverless platforms handle the function of running the applications.
Cloud adoption has surged. Microsoft Cloud Services usage has grown almost 8X since the pandemic began, and Azure revenue rose 60% YoY during the nine months ending in September 2020.
Scaling of servers can be key for applications experiencing higher traffic due to the Covid-19 pandemic (Google Meet’s daily usage in April was 25X that of January).
Most IT leaders have noted budgets increased or remained unchanged, which supports technology adoption (including serverless adoption).
Cloud computing giants such as Amazon (AWS Lambda), Google (Google Cloud Functions), Microsoft (Azure Functions), and IBM (IBM Cloud Functions) handle serverless computing platforms and the core service of providing server capacity.
The startups in the industry mainly function as service providers bridging serverless computing vendors with end users. Key among such support services are those that provide cybersecurity, support and consulting, open source codes, and analytics and integrations. In addition to these common categories, startups offer services such as database management, which leading company Fauna offers.
Most of the disruptors identified here were founded beginning in 2015, with the exception of Iron.io and Fauna, which were founded in 2010 and 2011, respectively. Cybersecurity disruptors Snyk and Aqua Securities, which offer a range of security offerings including for serverless computing, remain the highest funded disruptors.
All players offer their products as support services, which enable users to utilize serverless computing effectively and securely.
In November 2021, Netlify raised USD 105 million in Series D funding at a valuation of USD 2 billion led by Bessemer Venture Partners to double its employee base of 200 employees within 2022.
In January 2022, Netlify acquired Quirrel, an open source platform for managing and scheduling serverless functions for an undisclosed amount, to utilise Quirrel’s technology to add a “Scheduled Functions” feature to its platform’s serverless capabilities. This feature will enable developers to run functions on a regular and consistent schedule by automating tasks such as backups and running reports. The company also announced that a beta version of Scheduled Functions will be available on the platform for free.
Serverless function Platform:
Support and consulting services:
Three cloud computing giants dominate the core serverless computing market, according to a 2018 survey that highlighted most respondents, 58%, used Amazon’s AWS Lambda, 23% used Google Cloud Functions (GCF), and 10% used Microsoft Azure Functions.
In addition to serverless platform resources, these three leaders offer a range of support services and tools, including DevOps (which combines the development and operations of functions) and developer tools, application programming interface (APIs, which facilitate interactions between software intermediaries) management, AI, machine learning and Internet of Things (IoT) algorithms, among others, to help optimize their use. These offerings can vary among incumbents, and offer a value-add beyond the common disruptor offerings of open source and analytics, which incumbents tend to offer as well.
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