VentureBeat

Engine Yard, a hosting and support company for the popular Ruby on Rails programming framework, has raised $15 million in a second round of financing. Chief Technology Officer and co-founder Tom Mornini says the San Francisco startup will soon expand its offerings with the release of Vertebra, its platform for managing Rails applications in the Internet cloud.

The new funding is kind of surprising, since Engine Yard just announced its $3.5 million first round back in January. But the two rounds didn’t happen as close together as you might think, since Engine Yard actually secured the first round in October. More importantly, the company will eventually need more cash to grow, Mornini says, and if the economic slump continues, it could be a lot harder to raise venture backing in a few months.

The second round was led by New Enterprise Associates, with participation from Amazon.com and existing investor Benchmark Capital. Amazon’s involvement is particularly interesting, since Amazon Web Services is one of the leading providers of cloud storage, and some Rails deployment companies, such as Heroku, actually host their applications through Amazon. But Mornini is quick warn against reading too much into the deal — it just means Amazon executives think Engine Yard is a good investment, and isn’t necessarily a sign of future partnerships or acquisitions, he says.

As Engine Yard grows, its focus is shifting. Right now, the company’s selling point is the service and support it provides to its customers — and Mornini says Engine Yard doesn’t plan to abandon hosting — but the Vertebra platform could sbring in more money and a bigger customer base. Vertebra was initially developed for in-house use, to help manage Engine Yard’s hosting service. It’s logical to make Vertebra available as a separate product, too. Mornini says the platform will stand out through its ability to operate between clouds and to gradually add automation of repetive tasks to the application management process. He won’t give me an exact date for the release, but notes that Engine Yard has already created product prototypes, and adds, “It won’t be two years from now.”

The new funding will also support Engine Yard’s Ruby open-soure projects, Rubinius and Merb.

There’s been a spate of other Rails investment in the last few months, including $3 million for Heroku and $3.5 million, also from Benchmark, for application management company New Relic.

Engine Yard, a provider of support for the hot programming language and application framework, Ruby on Rails, has raised $3.5 million in a first round of capital from Benchmark Capital.

Ruby on Rails (or Rails, for short) has grown tremendously popular over the past two years, thanks to its light and agile nature. Leading companies of the latest Internet boom, including Twitter, have developed their applications using the framework. It is open source and therefore flexible — and is conducive to speedy development.

However, many of the fast-growing Rails-based companies have experienced choppy site performance. Twitter, for example, is notorious for its down-time. Some have criticized Ruby on Rails as being the problem, but the experts say it isn’t Rails per se, but rather the lack of precaution and readiness to handle its vulnerabilities. In other words, support is key.

That’s where Engine Yard comes in. Engine Yard, together with group of competitors, support Rails companies by hosting their applications and giving them round-the-clock support, such a monitoring, application revision control, and a computer cluster architecture designed to maximize web server and database efficiency (see Engine Yard’s basic offerings here, or techie details here). The sector is nascent. Engine Yard launched in late 2006. Other competitors include Joyent, a slightly older player (which won Twitter’s business, beating out Engine Yard), Rails Machine and many others. Engine Yard’s customers include Idealab and Kongregate.

Benchmark approached Engine Yard after Benchmark kept getting pitched by entrepreneurs using Rails to build their web applications, said partner Mitch Lasky, who is joining the company’s board. “Rail kept coming up and up,” he said.

Benchmark partner Peter Fenton will join him on the board.

Engine Yard’s chief executive Lance Walley said his team had planned to grow with out venture capital and was surprised a venture firm would want to invest. As chiefly a support company, Engine Yard on its surface didn’t offer the sort of breakthrough technology that can scale into a billion dollar company of the sort venture firms like to back.

However, the two sides discussed how a capital infusion could help Engine Yard work on some key open source projects that can help Rails perform better, including Rubinius (a more robust and speedier version of Ruby) and Merb (an adjunct of Rails). This work, in turn, might transform the company into becoming a software business, said Walley, one that can help it scale much more quickly.

Engine Yard hired Evan Phoenix, the leading developer of the Rubinius project, and has brought on four other key Rubinius contributors to work under him.

Engine Yard’s Walley said he took Benchmark’s money because the firm is considered the best in the open source arena. Engine Yard represents the firm’s eighth open source investment. Its companies include Zimbra, Red Hat, MySQL, Collabnet, SpringSource, Hyperic and Terracotta. Peter Fenton, now a partner at Benchmark, invested in JBoss and XenSource while was at Accel.

The company started in Sacramento, but has just moved to San Francisco’s South of Market area (SOMA) where many of the Rails companies are based (Engine Yard is ten doors down from Twitter now; watch out Joyent!)

The company is already profitable. It has a $3 million in annual revenue run rate, but that’s growing quickly, Walley said.