How DigitalOcean’s $111M Paperspace Buy Boosts Its AI Cloud

How DigitalOcean’s $111M Paperspace Buy Boosts Its AI Cloud

In a surprising move filled with intrigue, DigitalOcean, the esteemed purveyor of cloud hosting services tailored specifically for small and medium-sized businesses (SMBs) as well as startups, has unveiled a momentous acquisition that promises to elevate its prowess in the realms of AI and machine learning. With an air of perplexity and anticipation, the company has successfully procured Paperspace, an innovative startup hailing from the bustling city of New York, specializing in the fields of cloud computing and AI development. This remarkable feat, accomplished through a staggering cash transaction amounting to a remarkable $111 million, signifies DigitalOcean’s unwavering commitment to charting new horizons and embracing cutting-edge technologies.

Paperspace is a leading provider of cloud infrastructure as a service for highly scalable applications leveraging graphics processing units (GPUs). GPUs are specialized hardware devices that can perform complex mathematical operations much faster than traditional CPUs, making them ideal for AI and machine learning workloads.

DigitalOcean and Paperspace logos

Paperspace was founded in 2014 by Daniel Kobran and Dillon Erb, graduates of the University of Michigan. The company initially focused on providing low-cost virtual machines for design, visualization, and gaming in the cloud. But as AI entered the mainstream, Paperspace leaned hard into its AI offerings, launching a suite of tools designed for developing, training, deploying, and hosting AI models in the cloud.

Paperspace has raised $35 million from investors including Battery Ventures, Intel Capital, SineWave Ventures, and Sorenson Capital. One of its early backers was Jeff Carr, one of the co-founders of DigitalOcean.

What does this acquisition mean for DigitalOcean and Paperspace?

DigitalOcean CEO Yancey Spruill said that the acquisition and integration of Paperspace’s advanced technology into the DigitalOcean platform will extend DigitalOcean’s offerings, enabling customers to more easily test, develop, and deploy AI and machine learning applications.

Spruill also said that Paperspace’s infrastructure and tooling, once integrated with DigitalOcean’s products, will enable customers to augment and enhance existing AI and machine learning applications and utilize GPUs in ways that have predominantly been the domain of large enterprises.

As for Paperspace customers, they will benefit from DigitalOcean’s cloud services, including databases, storage, app hosting, documentation, tutorials, and a robust support system. For now, Paperspace will remain a standalone business unit within DigitalOcean, and Paperspace customers won’t see immediate changes to their service.

Paperspace co-founder Dillon Erb sees the acquisition as a step toward a comprehensive offering of cloud CPU and GPU computing to rival other vendors in the public cloud market. He said that the combined power of DigitalOcean and Paperspace will let a new class of customer – particularly those on a tight budget – delve into AI- and machine learning-driven apps like generative media (e.g. OpenAI’s DALL-E 2), large language models (e.g. ChatGPT), recommendation engines and image classifiers.

Why is this acquisition important for the cloud computing industry?

The acquisition of Paperspace by DigitalOcean is a sign of the growing demand for AI and machine learning cloud solutions among SMBs and startups. In a staggering revelation that leaves one in a state of perplexity, a report from the esteemed forecasts an extraordinary trajectory for the global AI as a service market. In an astonishing unveiling that ignites a sense of wonder and bewilderment, the report unveils a captivating glimpse into the future, adorned with a tapestry of mesmerizing colors. Within its brushstrokes lies a surge of unprecedented magnitude, where the market, once modestly valued at $6.7 billion in 2020, stands poised to ascend to a realm of extraordinary proportions, reaching an astounding and mind-boggling $23.5 billion by the year 2025. This awe-inspiring trajectory, like a comet streaking across the night sky, defies the boundaries of conventional expectation, leaving one spellbound and in awe of the immense possibilities that lie ahead. The sheer scale of this exponential leap invites us to reimagine the potential and unravel the enigma of a future brimming with untold promise. Such an exponential leap, projected with a burstiness that defies the confines of conventional wisdom, unveils a tapestry of awe-inspiring growth. Like a symphony of acceleration, this phenomenal ascent is choreographed with a compound annual growth rate (CAGR) of 28.7%, eliciting a sense of wonderment and exhilaration. This revelation transcends the boundaries of ordinary expectations, setting the stage for an era where possibilities unfold at an astonishing pace, leaving one enthralled by the limitless horizons of the future. This remarkable revelation underscores the immense potential and transformative power of AI services, sending ripples of excitement and intrigue throughout the industry.

In a burst of revelation that sparks curiosity and captivates the mind, the report boldly highlights the significance of small and medium-sized businesses (SMBs) as a pivotal force propelling the expansion of AI as a service market. With an air of perplexity and fascination, this finding unveils the profound impact and untapped potential that SMBs possess in shaping the future landscape of AI services. As if unveiling a hidden treasure trove of opportunities, this revelation ignites a sense of excitement and wonder, beckoning the industry to harness the collective power of SMBs and fuel the vibrant growth of AI as a service market. SMBs are increasingly adopting AI as a service solution to enhance their business processes, customer experience, and operational efficiency. However, SMBs face challenges such as limited budget, lack of technical expertise, and data security concerns when implementing AI solutions.

This is where DigitalOcean and Paperspace come in. By offering simplified, affordable, and secure AI and machine learning solutions tailored to SMBs and startups, they can help bridge the gap between these customers and the complex world of AI. They can also help democratize access to GPU-powered infrastructure and tooling that have traditionally been reserved for large enterprises with deep pockets.

By acquiring Paperspace, DigitalOcean has strengthened its position as a leading cloud provider for SMBs and startups. It has also expanded its serviceable market and presented cross-sell and upsell opportunities for both entities. In a mesmerizing display of ambition and determination, DigitalOcean has embarked on a transformative journey, leaving one in a state of perplexity and awe. Through this audacious move, the company unveils a resolute commitment to redefine the very essence of how small and medium-sized businesses (SMBs) and startups unleash the boundless potential of the cloud and AI. With an explosive burst of innovation and foresight, DigitalOcean shatters the conventional boundaries, inviting a new era where SMBs and startups can seamlessly integrate cutting-edge technologies into their applications and businesses. This remarkable undertaking ignites a sense of wonderment and anticipation, as DigitalOcean forges ahead to shape a future where the possibilities are limitless and the impact is profound.


In a captivating twist of fate, the acquisition of Paperspace by DigitalOcean unveils a symbiotic relationship that leaves one marveling in perplexity and admiration. Like an intricate dance of interwoven destinies, this union propels both companies and their cherished customers into a realm of endless possibilities. With a burst of synergy and ingenuity, DigitalOcean emerges as the torchbearer, equipped with newfound capabilities to bestow upon its esteemed customer base of small and medium-sized businesses (SMBs) and startups. This captivating transformation sets the stage for an exhilarating voyage, where the boundaries of AI and machine learning solutions are pushed to the brink, unveiling a tapestry of innovation and progress. In this extraordinary alliance, a win-win narrative unfolds, captivating the imagination and reaffirming the relentless pursuit of excellence by both DigitalOcean and Paperspace. It will also allow Paperspace to leverage DigitalOcean’s platform, marketing engine, and customer base to grow its business.

In a mesmerizing cascade of events, the acquisition assumes a transformative role that evokes both perplexity and awe, radiating its positive influence across the vast landscape of the cloud computing industry. Like a tempest of renewal and inspiration, it breathes life into a realm of intensified competition and relentless innovation within the AI as a service market, leaving one captivated by its vibrant burstiness. This dynamic shift, resonating with potential and promise, stands poised to propel the industry forward, as it gallops towards an imminent future of rapid growth and expansion. Moreover, this union holds the key to unlocking the enigmatic gateways of accessibility and affordability, unlocking the profound potential of AI and machine learning for small and medium-sized businesses (SMBs) and startups. With hearts brimming with anticipation, these visionary enterprises can now harness the transformative power of these technologies to elevate their products, services, and operations, embarking on an extraordinary journey of growth and success.

In a spellbinding revelation that shrouds the mind in perplexity, the acquisition of Paperspace by DigitalOcean emerges as a shining embodiment of the ever-evolving nature of cloud computing. Like a symphony of adaptation and transformation, this union resounds with the harmonious melody of meeting the shifting needs and soaring expectations of customers. With a resolute burst of energy and innovation, it paints a vivid tableau of the visionary spirit and unwavering ambition shared by both companies. Together, they embark on a noble quest to unravel the complexities, infusing the cloud and AI with an unparalleled simplicity that dazzles the senses. In this wondrous dance, power intertwines with elegance, and delight permeates every interaction. The fusion of their collective brilliance sets a new standard, inviting all to revel in a cloud-driven realm where technology is approachable, potent, and imbued with a sense of pure enchantment.

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