What Rescale’s $105M Funding Round Says About HPC Cloud

Patience in a slow-growing market is tough, but supercomputing cloud startup, Rescale, is reaping rewards for its persistence.

When the company got its start in 2011, enterprises were just getting a handle on bursting to the cloud for excess capacity and in some cases, moving all operations off-prem. Cloud was the buzzword with plenty of emerging use cases to back its legitimacy—in enterprise, at least. High performance computing was a holdout then and some could argue, it has remained one until relatively recently. For one thing, it was difficult, especially with restrictive software licenses and deployment complexities. But the cloud providers themselves have made onboarding apps a snap and there are plenty of ways to DIY even the most latency-sensitive, proprietary licensed HPC applications for both hybrid or full-cloud runs.

Before and even after these additions with or without specialized cloud tooling from vendors like Rescale, HPC was slower than the rest of the world to adopt cloud. Some of this was because license models for technical computing software had not been primed for cloud but in many cases, it was because performance mattered too much for the latency hit. But those times are long gone, especially on the performance front. With some swift kicks from global events, HPC clouds are now a contender, especially for mid-sized HPC deployments.

And clearly, some of the world’s most powerful investors see plenty of room at the top of this market, even if the largest public clouds have worked to make all those old-school HPC cloud problems go away natively.

HPC research firm, Hyperion, says cloud for HPC applications is expected to grow 2.5X faster than the on-prem HPC server market with a new tipping point in demand driven by the pandemic, which pushed admins off-site and onto various public clouds. While the COVID crunch might have been a physical driver, other factors, including leaps in performance capabilities (compute, network, storage), easier cloud/hybrid deployments, and more attractive pricing models have also pushed HPC shops to the cloud.

Rescale has around 400 customers, which might not sound like much compared to the large public clouds but remember, they are not in the business of providing the hardware, which means they can scale along with demand without investing in new datacenters or colo facilities.

While they call themselves a cloud, it is a collection of automation tools to allow easier deployments of complex, performance-sensitive applications on specific public clouds or across some combination of those. We described the platform itself in 2015 and while the company is (and has always been) cagey about how it all works, it has tight hooks with AWS and now Azure (Microsoft acquired Cycle Computing, which was doing essentially the same thing—calling itself a cloud but really just providing an application and automation platform to sit on top of that perceived complexity).

In that 2015 piece based on an interview with Resacle CEO, Joris Poort, he said that each of the datacenters/cloud providers could bring something different to the table. Some provide resources that exist solely because of their geographic importance to a certain set of engineering end users, others because they are outfitted with GPU accelerators, fat memory, low-latency InfiniBand networking, and other more specialized hardware elements.

What was true in 2015 persists today. Then, Poort told us “For users, the real benefit is being able to get on-demand or hourly licensing—that removes a lot of constraints on what can be accomplished. For instance, at the most basic level, there is an engineering software package that a user wants to bring their license to—that is simple through our portal. But at the highest level, with something like Siemens PLM, we have that entire suite of simulation tools for purchase on demand or hourly directly through our interface. There’s an hourly price, although there is a premium because it is hourly versus annually, but it is right there and available immediately.”

Since that time they have captured a sizable bit of business, at least we assume, by adding up to date ANSYS, LS_Dyna, CD-ADAPCO and other engineering tools. The next frontier will be adding more EDA suites to capture that expanding market, something we will get to shortly.

In Rescale’s announcement of $105 million in Series C funding, Poort points to an acceleration in demand among an overall HPC market spend of $60 billion by 2025 with HPC clouds showing a compound annual growth rate of 80%. “Many workloads in the overall scientific research and development category—estimated at $185 billion in 2020 and mostly still conducted in on-prem datacenters also benefit from the advantages of hybrid cloud computing.”

Investors too are seeing demand for specialized cloud services like Rescale’s spike. The startup’s list of individual investors includes Jeff Bezos, along with Peter Thiel, Sam Altman, and Richard Branson. Institutional investors include NVIDIA, Prometheus Ventures, Keen Venture Partners, Samsung Catalyst, and Hitachi Ventures, among others.

Wolfgang Seibold of Hitachi Ventures sees demand growth for HPC areas. “Computational science and engineering are foundational to the innovations our society will depend upon over the next decade in energy, life sciences, manufacturing, and transportation.” He adds, “The core software and algorithms used across these industries are compute-bound, tying the pace of innovation to the pace of computation. Rescale liberates innovators to create the next greatest ideas.”

While Rescale might have been able to slowly capture HPC shops that are either bursting or moving to cloud entirely, the next leap for HPC cloud is much bigger. The first step is garnering some of the AI training business, the second is in convincing enterprises that what they do is “HPC enough” to be a prime fit for their cloud. This means expanding beyond the HPC application catalog into more business and analytics-focused applications, which the company has worked toward with its Rescale Insight enterprise management product. This is a suite of over 400 applications that serves as a managed full-stack IT control center for enterprise.

Another growth segment ripe for Rescale’s picking is in government. The company recently secured federal compliance via its ScaleX Government platform, a fully managed HPC service that is FedRAMP Moderate and ITAR compliant for customers in the U.S.

What Rescale needs to continue to prove is that it can secure large organizations. In 2019, the company added Nissan to its list of public users. Nissan used Rescale ScaleX platform on AWS for select engineering applications. Another engineering simulation company, Vertical Aerospace, has also used Rescale for its aircraft simulations.

“By choosing Rescale as our strategic cloud partner for digital R&D, Vertical Aerospace has dramatically increased engineering efficiency and accelerated new product commercialization without compromising quality or safety,” said Madhu Bhabuta CIO, Vertical Aerospace. “The reduction in turnaround time Rescale’s offerings resulted in, have enabled us to execute around four times as many aircraft envelope calculations as we work to fine tune our flight models within the same amount of time as before. Additionally, we have been able to run other simulation programs using their vast array of optimised core-architectures that have also seen similar degrees of speed up.”

EDA has been one of the most discussed HPC cloud opportunities of 2020 with those professionals moving off-site and new applications (and refactored ones to fit more modern devices coming on to the market). Rescale is also seeing a valuable opportunity in EDA, especially with the increased demand for semiconductors on tight schedules. EDA company, pSemi used Rescale for its simulations, claiming a reduction in time to result of 15 hours, down from 7 days with their on-prem systems.

Rescale can only grow as fast as the HPC cloud market and while that’s moving along at a fast clip, their main competitors are the very cloud vendors they rely on for the infrastructure. With AWS and Azure making it easier than ever to onboard HPC applications, see clear pricing, grab spot and other cheaper instances, and easily adopt SaaS licensing and roll it directly into production, there could come a day when Rescale is less necessary.

While these are still development days for HPC clouds they are not early days. The handholding required in 2015 or even 2018 is not as necessary as it was when Rescale and Cycle Computing got early starts. AWS, Azure, and Google Cloud Platform all make cloud adoption downright breezy compared to even five years ago, which will make Rescale have to work harder to tell a compelling TCO story.

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