Yes, there were exceptions, but they were few and far between, and even fewer of them were in the tech sector. Now, plenty of startups skip angels and seed funders in favor of crowdfunding (Kickstarter, Indiegogo) or simply using their own credit cards.
For many types of startups, this wouldn’t have been possible ten years ago. To be taken seriously, you needed office space, locally based employees, a strong web presence built on at least a few servers, computers for all of your knowledge workers, and on and on. Operating and development costs left entrepreneurs few options but VCs.
Today, many of those costs have been eliminated (do you really need office space or can everyone work remotely?), driven down to next to nothing (startups rent servers now), or absorbed by the workers themselves (BYOD).
Look at what happened with virtual reality startup Oculus Rift. The company’s initial capital came from a Kickstarter campaign. The Kickstarter money helped the startup attract VC funding, and then Facebook acquired it for $2 billion.
Okay, for the most part, Oculus Rift did follow the traditional path. But crowdfunding arguably accelerated their journey. For other startups, the cloud means that they have more to prove before securing funding. According to a 2013 study by the Angel Resource Institute, Silicon Valley Bank, and CB Insights, sixty three percent of angel investments made in 2012 were secured by revenue-producing startups.
Still other startups, such as smart watch maker Pebble and Ouya, which has developed an Android-based gaming console, have bypassed venture funding altogether.
Once companies are out in the marketplace, more and more of them will be dependent on the cloud. “Consumers don’t have much visibility (or say) in whether a company uses a private internal network or leverages a public cloud service provider to host their data, so companies will do what makes the most sense from a cost perspective,” said Eric Chiu, President of HyTrust.
The cloud isn’t just here to stay. Soon, it will be an engine for much of the economy.
Photo courtesy of Shutterstock.