Alibaba has spent 2017 pushing its cloud computing business and now it is preparing to make its first major investment in a Western startup in the space.
The Chinese e-commerce giant has agreed to lead a €22.9 million ($27 million) investment in MariaDB, the European company behind one of the web's most popular open source database servers, according to a source with knowledge of negotiations. The deal has not closed yet, but it is imminent after MariaDB's shareholders gave their approval this week.
Neither Alibaba nor MariaDB responded to requests for comment.
TechCrunch understands that Alibaba is contributing around €20 million with the remaining capital coming from existing backers. The deal values MariaDB at around the €300 million ($354 million) mark and it will see Alibaba's Feng Yu, a principal engineer within its cloud business, join the startup's board.
That represents a significant appreciation on the $200 million-$250 million valuation that it got back in May when it raised €25 million (then worth $27 million) from the European Investment Bank. Our source indicated that Alibaba's willingness to do business essentially enabled MariaDB to pick a valuation of its choosing.
MariaDB is best known for operating the most popular alternative to MySQL, a database management system. Both are open source products but there is caution from some around MySQL from some because it is owned by Oracle -- a huge corporation -- courtesy of its acquisition of Sun Microsystems.
Alibaba's cloud computing business is one of its fastest growing units, consistently charting triple-digit revenue growth over the past year.
We wrote earlier this year that it is pushing hard to rival the industry's biggest players, like AWS, Microsoft Azure and Google Cloud. While it still has some way to go, the signs are promising. The cloud business hit $1 billion in annualized revenue this year and it surpassed one million customers during the most recent quarter. The unit is likely to reach break-even in coming quarters, though it still accounts for less than five percent of Alibaba's overall revenue.
Cloud is just one area Alibaba is focused on developing as it looks to generate new sources of revenue to lessen the dependence on its core China commerce business, even though that continues to be hugely lucrative.
The firm has made big investments in those other areas -- backing unicorns Paytm in India, and Lazada and Tokopedia in Southeast Asia -- so why not look at the wider cloud/infrastructure industry for deals to advance its strategy?
Having invested in Chinese players like cloud storage provider Qiniu and big data firm Dt Dream, joined Microsoft's open source community and even worked with MariaDB directly in China, this would be Alibaba's most notable cloud deal on overseas turf.
Formerly known as SkySQL, MariaDB is attractive to Alibaba due to its presence in the industry. It has offices in Sweden and the U.S. and claims around 12 million global users of its databases, with some of the larger names including Booking.com, HP, Virgin Mobile and Wikipedia. Its solutions are used in private, public and hybrid cloud deployments and it is the default in a number of Linux distributions like Red Hat, Ubuntu and SUSE, which adds a further reach of 60 million users.
SkySQL was originally founded in 2009 and merged with Monty Program Ab in 2013. Monty Program was founded by Michael 'Monty' Widenius after he sold his previous company MySQL to Sun Microsystems (now owned by Oracle) in 2008 for $1 billion. MariaDB later forked MySQL due to concerns about the way Oracle might use it.