Vates Raises €30M to Challenge VMware With Open-Source Virtualisation

Vates has raised €30 million from IRIS and Bpifrance to expand its open-source virtualisation platform and compete for enterprise customers looking for alternatives to VMware.

The Grenoble, France-based company has spent 14 years building its business without major outside funding. That changed after Broadcom acquired VMware and customers began reassessing their virtualisation strategies.

Vates was founded by Olivier Lambert, Nithida Vialle and Julien Fontanet. The founders remain majority shareholders following the new investment.

The round was led by IRIS' Growth fund and Bpifrance's Large Venture fund. Vates plans to use the capital to accelerate product development, expand sales in North America and Europe, and build a larger network of distributors, integrators and technology partners.

Building an open-source alternative to VMware

Vates' core technology is XCP-ng, an open-source hypervisor that allows multiple virtual machines to run on a single physical server.

Alongside XCP-ng, the company offers Xen Orchestra, a management and backup platform designed to help organisations operate their virtualised environments.

The company originally started in 2012 as an open-source integrator and audit firm. It later moved into software publishing and launched the first commercial edition of Xen Orchestra.

XCP-ng was eventually launched through a Kickstarter campaign that raised nearly 650% of its original goal.

Vates says it has remained profitable and self-funded since 2016.

Today, the company serves more than 1,000 customers across around 100 countries. About 90% of its revenue comes from outside France, while North America represents close to half of its business.

The company also reported more than 65% growth in 2025, although it has not specified whether this figure refers to revenue.

Broadcom's VMware acquisition created an opening

The timing of Vates' funding is closely connected to changes in the virtualisation market.

Broadcom completed its acquisition of VMware in November 2023 and subsequently shifted customers toward subscription-based offerings.

That transition has encouraged some organisations to reassess their existing virtualisation infrastructure.

For Vates, this creates an opportunity to position open-source technology around three ideas: interoperability, reversibility and customer choice.

The company argues that enterprises should not have to depend entirely on a single vendor for critical virtualisation infrastructure.

That pitch is particularly relevant in Europe, where digital sovereignty and control over strategic infrastructure have become increasingly important considerations for governments and large organisations.

Vates enters a crowded market

Vates is not competing in an empty market.

Gartner's Server Virtualization Platforms Magic Quadrant includes major players such as Broadcom's VMware, Nutanix, Microsoft, Red Hat and Platform9.

Vates says it has appeared in the Gartner quadrant for the first time and describes itself as one of the few European vendors included.

The company is significantly smaller than several of its competitors.

Nutanix, for example, reported $723 million in quarterly revenue in early 2026 and has been investing heavily in AI infrastructure alongside AMD.

Vates' new €30 million round is therefore less about matching competitors financially and more about expanding its ability to serve larger customers.

Where Vates plans to spend the money

The company has identified three main areas for investment.

First, it plans to develop the next generation of its virtualisation platform, with work focused on performance, storage, security, automation, large-scale deployments and AI workloads.

Second, Vates plans to increase sales and marketing activity in North America and key European markets.

The company wants to move further into larger enterprises, public-sector organisations and service providers.

Third, it plans to expand its partner network, including distributors, systems integrators, service providers and technology companies that can help customers migrate larger environments.

That migration opportunity could be particularly important for organisations reconsidering VMware.

Moving a virtualisation environment is not a simple software switch. Customers need support across infrastructure, applications, storage, networking, security and ongoing operations.

European digital sovereignty becomes part of the pitch

IRIS and Bpifrance's investment also reflects a broader European push to build strategic technology companies within the region.

Nicolas Herschtel, a partner at IRIS, said Vates demonstrates that open-source software can meet the requirements of large organisations operating critical environments.

Cindy Ung, investment director for Large Venture at Bpifrance, said the investment supports the development of a French and European technology company focused on digital sovereignty and critical infrastructure.

Vates has already pursued this strategy through partnerships.

In 2025, Eviden, the Atos Group's product brand, partnered with Vates to offer what the companies described as a sovereign infrastructure stack extending from hardware through to the virtualisation platform.

The new funding gives Vates the opportunity to build on that positioning.

The challenge ahead

Broadcom's VMware strategy has created an opening, but it does not guarantee customers will move to Vates.

The company still needs to convince large enterprises and public-sector organisations that an open-source, support-led model can provide the reliability, security, scalability and migration support required for critical infrastructure.

The competitive environment is also becoming stronger, with Nutanix, Microsoft, Red Hat and other vendors continuing to invest in virtualisation and AI infrastructure.

Vates now has €30 million in fresh capital to scale its platform and commercial operations.

The next phase will determine whether its open-source approach can turn dissatisfaction with traditional virtualisation vendors into long-term enterprise customers.