UK-based cloud start-up OnApp scored $20 million in Series B funding this week, providing validation for some industry members that the service provider and hosting markets are the future of cloud computing.

The round was led by UK private equity house and existing investor LDC. The funding will be used to help OnApp roll out a new line of products and services in 2013, as well as expand into new global markets.

OnApp claims to power public cloud services for more than 500 providers in 39 countries. Around 40 percent of its revenue currently comes from the US market, but it is also seeing strong growth in Asia-Pacific and Latin America.

The company’s flagship product is OnApp Cloud, which provides “everything you need to build a fully featured cloud hosting service” and can be deployed in a matter of days.

It also offers OnApp CDN, designed to optimise website performance, OnApp Marketplace, which allows service providers to monetise their spare infrastructure, and OnApp Storage, which aggregates the capacity of commodity physical disks into a virtual SAN.

Many enterprises are now turning to service providers to provide their private, hybrid and public cloud-based IT, rather than developing solutions in-house. Gartner claims this is a $30 billion market opportunity, with exponential growth predicted.

George Knox, CEO of rival service provider Flexiant, said that OnApp’s announcement is great news for the cloud management industry, and supports the notion that cloud management is essential for building a cloud services business.

However, competition is hotting up and, with big boys like Citrix, VMware, Nimbula, Eucalyptus and Openstack still dominating the market, it will be interesting to see where companies like OnApp and Flexiant can score points.

For the most part, the the advantage is likely to come through providing easy-to-deploy and affordable products, and offering bespoke support services to customers around the world.