Startups In The Cloud Era – Things Have Changed
There are numerous startups of all varieties of purpose and goals. We have seen great successes and great failures. We have seen a lot of money being made on fabulous exits, but also seen a lot of money lost as well.
Things are changing for startups, and in turn, they are changing for investors as well. What affects how startups must work affects how investors must forecast chances of success, and which ponies they want to back. Of course, with progress, change is inevitable and ubiquitous, but the past couple of years have seen the steepest change in this industry’s history. What is this culprit? Cloud computing.
To appreciate the change, and what aspects it is wrought upon, let’s first talk for a minute about the classic challenges faced by startups.
First, of course, is the venture capital issue. This is really why investors exist, but startups can’t solve some of the initial monetary issues they face before approaching investors. Many investors won’t even consider investing in someone with no early demonstrable prototype of some sort. Sadly for startups, that requires some money to achieve 9 out of 10 times, and for that step, they are unfortunately on their own.
The next problem investors can’t really directly help startups with either, is their marketability. Sure, if investors believe in a cause, they can throw money at marketing, but it’s up to the startups themselves to have a product or service that meets a proper demographic, and can overcome the obstacle of them being a newcomer. Unless their service or product is absurdly novel and earth shattering, the startups have to be heard above the din of countless established and successful providers of the same service/product. All investors can do is arm them with the loud speaker, but it’s mostly luck if the batteries work.
But, if startups manage to overcome this, and they have won the investors’ approval with a working prototype of their service/product, they still have to give the investors some justifiable expenses. Just starting out, there’s no success rate to gage them by, obviously. So, when costs for infrastructure such as web hosting, computing equipment and the like come up, how much do they expect investors to invest in? There’s a fine line between optimism and being rational with this. Investors have to be a bit stoic, even if we don’t like to be.
But, cloud computing is changing some of this, especially in the software industry. With cloud computing, operating environments for prototypes and virtual environments are affordable to access, so much so that startups need very little initial capital to implement them.
They no longer need powerful infrastructure to develop and demonstrate upon, rather offloading this to a server somewhere that they rent on the cheap, due to sharing it with others, over a daisychain of machines.
Cloud computing doesn’t alleviate their problem of being heard, though cloud and software service models for easy advertising and outreach online are starting to appear. They’re not really ready yet, but this will change this problem soon enough, though I can’t see it being an end all solution.
People are fickle creatures, and just because information reaches them does not mean they will choose to notice or acknowledge it. The same infrastructure they later expect investors to invest in, however, is entirely more affordable, so what they may expect investors to enable is a fair deal more than it once was. This is great for investors, as it means their startups of choice have a greater chance of success with less risk to us.
In light of this, here are some tips I assembled from experts for startups out there, in this new cloud age, for success, and for gaining investors:
Focus on Your Current Platform Right Now
Unless you’re designing something mobile specifically, don’t worry about mobile for the moment. Trying to bite off too many platforms to chew will be costly, and the complicated models of deployment this spawns will turn investors off. If you’re primarily mobile, the same goes for other platforms in its stead.
Prototypes Can Wait
With cloud computing being so affordable, you have time to test your concept in a number of scenarios before even approaching us with prototypes. Through this you can see room for improvement, added functionality and overall improvement of your model. Knowing cloud computing is giving you better initial facilities will mean we will raise the bar on what investors expect out of the first “ugly” prototype.
Take Advantage of Cloud Computing Collaboration
Utilize the collaborative nature of cloud computing to reduce your costs in development time and monetary expenses. With cloud computing, you can work on your product collaboratively from different locations, even from your mobiles while you shop if you like. Take advantage of this team omnipresence, because investors will be expecting you to.
Multi-Prong Profitability Structure
Have a plan that uses cloud computing’s multi-prong profitability structure to get maximum gain from any implementation. If you want a free model, investors expect you to use ad software services to make it still profitable.
Accessibility for Investor Observation
Cloud computing makes it possible for investors to easily access revisions of your prototypes in real-time, which saves you money and time, and pleases us as potential investors. Take advantage of live box cloud software which lets investors see your current prototype builds as they are worked on and released. Investors like being in the know, and will be more willing to divulge further investments more easily if we have this level of observation at our disposal.
Unfortunately, cloud computing can’t entirely solve the outreach. It also can’t guarantee a product or service is a good idea, or that the people will care about it. It also cannot resolve all man our issues, and cannot guarantee investor interest.
So, cloud computing is changing how investors judge proposals, and it should be changing how your startup is approached as well. Being flexible is preferable being stiff. Investors are changing in light of cloud computing’s ramifications. Startups must join in this transformation.
By Omri Erel,
Omri Erel is the lead author and editor of “SaaS Addict”. And Marketing Director at WalkMe – the World’s First Interactive Website Guidance System.