Profitable and self-financed since 2016, the Grenoble publisher is opening up its capital to accelerate its technological and commercial investments. The re-competition from VMware offers it an opportunity to win over more customers, provided it has the teams and partners capable of supporting large deployments.
For ten years, Vates financed its development with income from its activity. The virtualization software publisher today announced an initial fundraising of 30 million euros. According to the company, this opening of capital comes after growth of more than 65% in 2025, with more than 1,000 customers in around a hundred countries.
Profitability allows continued development, but it does not necessarily provide the means to simultaneously commit all the investments necessary for rapid expansion. Vates needs to strengthen its platform, recruit internationally and expand its network of integrators, as changes at VMware push organizations to re-examine their infrastructures. Self-financing leaves the publisher dependent on the pace at which its revenues grow; the capital contribution allows it to anticipate more expenses.
“We are not raising funds to change strategy, but to accelerate the one we have been pursuing since the beginning,” explains Olivier Lambert, CEO and co-founder of Vates.
An infrastructure to operate on a daily basis
Virtualization allows you to run several virtual servers on the same physical machine. Each has its own operating system and applications, while computing, memory and storage resources are shared. This organization is used to better use hardware and administer applications without systematically dedicating a physical server to each.
Vates combines two main products. XCP-ng, built around the Xen hypervisor, runs the virtual machines, and Xen Orchestra provides the tools to administer them, organize their backups and automate operations. A complementary solution, XOSTOR, allows storage to be shared between several servers.
For an IT department, the choice concerns several functions on which the continuity of the activity depends. You need to be able to back up data, restore services, update systems and resolve incidents. The commercial value of Vates is built in this daily operation as much as in the capabilities of the software.
The technologies are open, and Vates sells support subscriptions as well as services and out-of-the-box distribution of Xen Orchestra. For medium and large infrastructures, pricing is based in particular on the number of physical servers, with different levels of support. The growth of the installed base must therefore finance product development and the teams who monitor it. This articulation between open software and commercial services is part of the diversity of open source economic models, mentioned by Jean-Baptiste Kempf.
VMware brings infrastructure choices back into discussion
Broadcom’s acquisition of VMware has changed the business environment in which Vates operates. Broadcom has initiated a transformation of the offers and the licensing model, with a refocusing on subscriptions and the end of availability of certain perpetual licenses.
These changes offer alternatives an opportunity to enter the discussions of IT departments. When a contract comes up for renewal, maintaining the existing one can be compared to a migration, taking into account the price, the functions used and the dependence on the supplier.
This re-competition concerns a publisher which already has an international presence. Vates indicates that it generates 90% of its turnover from exports, with North America representing almost half of its activity. The investments announced in this region aim to strengthen a market that is already central to its revenues, while developing its European positions.
Funding must be able to respond to more projects as clients envision them. A sales team is recruited before signing its first contracts, a new function is developed before being purchased and a partner is trained before carrying out a migration. These expenses precede the income to which they must contribute.
Invest before contracts finance growth
Vates focuses its investments on three priorities. The first concerns the next generation of its platform, with work on performance, storage, security, automation and administration of large infrastructures.
The second focuses on sales and marketing capabilities, particularly in North America and key European markets. The publisher wishes to work with more large companies, public organizations and service providers, whose projects require support adapted to their operating constraints.
The third concerns distributors, integrators and technology partners. Their role becomes decisive when the deployment involves multiple sites, numerous applications and teams who must learn to operate a new environment.
The economic logic of this lifting consists of carrying out these efforts in parallel. It gives Vates the opportunity to commit more resources before additional contracts fund them. However, current turnover and recurring revenues are not published, which limits the assessment of the extent of the planned change in scale. This use of capital to develop a global presence is reminiscent, in another infrastructure segment, of Aiven’s international expansion financed by its fundraising in 2021.
The cost of exit matters as much as the price of entry
Vates must convince against VMware, but also against several alternatives. Nutanix combines its AHV hypervisor with an integrated compute, storage and administration platform. Proxmox offers an open source solution bringing together virtual machines and containers, while Red Hat OpenShift Virtualization allows you to operate virtual machines in the OpenShift environment.
Code openness is therefore an attribute shared by several offers, and the decision also depends on integrations, available skills and level of service. For a customer already equipped, retaining VMware also avoids the immediate costs and risks of a change.
The XCP-ng migration documentation gives a concrete measure of these constraints: the procedures vary depending on the storage used and certain configurations require stopping the virtual machines. Moving to a new platform requires preparing backups, verifying applications and adapting operating procedures.
Savings on subscriptions should be appreciated with this transition effort. The ability of Vates and its partners to secure migration will therefore determine part of its competitiveness. The possibility of changing supplier thus becomes an operational criterion, as illustrated by the place given to reversibility in MAIF’s IT purchasing policy.
Preserve the model by accelerating its deployment
Vates says the co-founders remain majority shareholders and that XCP-ng and Xen Orchestra will keep their licenses open. The arrival of investors nevertheless introduces a new stage in the publisher’s trajectory: the additional resources must translate into commercial progress capable of supporting the expenses incurred.
The evaluation will go through the deployments, then their duration. A migrating customer constitutes a first result; its renewals and the extension of uses show the supplier’s ability to respond sustainably to its needs. For Vates, the challenge will be to maintain the quality of service as the supported infrastructures become more numerous and more important.
Founded in 2012 in Grenoble by Olivier Lambert, Nithida Vialle and Julien Fontanet, Vates announces an initial fundraising of 30 million euros from IRIS, via its Growth fund, and from Bpifrance, via Large Venture. The co-founders remain in the majority after the operation. This funding must strengthen the publisher’s technological development, international sales teams and partner network.
