DigitalOcean Enters AI Race—Acquires AI Startup Paperspace for $111M in Cash

digitalocean acquires paperspace

DigitalOcean acquires Paperspace to diversify into AI and ML tooling for developers.

DigitalOcean is one of the world’s leading cloud hosting business providers. It announced its plan to acquire Paperspace, which is a cloud computing and AI development startup, for $111 million.

The idea behind the acquisition is to integrate Paperspace’s tooling and infrastructure in the DigitalOcean dashboard to provide various testing, development, and deployment utilities for AI applications.

Paperspace’s existing customers will get a bonus—They will be able to use DigitalOcean’s database, storage, app hosting, documentation, and other systems.

Currently, the business model of Paperspace is to enable developers to learn applied deep learning and AI. It offers tools to build a proof of concept, train models, and create API endpoints for AI applications.

The affordable cloud GPUs that Paperspace offers are designed to reduce the upfront cost of managing servers for AI developers. The service offers per-second billing and claims to help developers save up to 70% on their compute costs.

With this acquisition, DigitalOcean is adding AI and ML capabilities to its range of offerings. Notably, DigitalOcean’s co-founder Jeff Carr has backed Paperspace alongside Y Combinator.

Paperspace was founded in 2014 by Daniel Kobran and Dillon Erb. It runs its own cloud data centers with custom-configured GPUs. The tool has been instrumental in the development of many LLMs, mainly catering to small and medium enterprises.

The match is symbiotically sensible and allows DigitalOcean’s users to get started with GPU workloads and AI/ML training for their own applications.

Official announcement: Paperspace Joins DigitalOcean

Earlier this year, Paperspace joined Nvidia Cloud Service Provider’s highest tier, offering higher-end Nvidia GPUs including the H100 Tensor Cores.

By Abhimanyu

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