– How the Cloud Will Be Capitalized

In December, Google announced its launch into the public cloud as a direct assault on Amazon, IBM and Microsoft, betting it can be the systems infrastructure for corporations. Businesses of all kinds will be built on top of such computing power and storage capacity. But how are SaaS (software as a service) and IaaS (infrastructure as a service) vendors (other than the giants) going to be capitalized and financed to enable the next leap in cloud computing?

Relative to the enterprise software sellers of the past, SaaS companies require less upfront dollars to build infrastructure (e.g., servers). By some estimates, the application company of the past required 10x to 100x the capital to realize the same enterprise value. But SaaS companies confront greater working capital challenges. Those challenges come from client acquisition and on-boarding.

More of the article by Steve Bergquist