6 Cloud Considerations For Tech Start-ups
By Martin Kratz,
June 19, 2015

The start-up should consider a number of factors as steps to maximize their ability to build successful businesses.

It is common for a start-up to use the cloud as a delivery mechanism. Often the start-up has a specific application that it distributes using a “software as a service” modality, where the start-up hosts the application on a server so customers can receive the use of the application as a service.

Cloud based services

The advantage for the customer is a utility-like service where they have no responsibility to purchase the software, keep it current or pay for ongoing maintenance. The vendor (the start-up) does all of this. Such cloud based services are typically available at a fraction of the cost of the customer acquiring the software for the same purposes. That is why cloud based delivery of services has grown so quickly over the last decade.

The cloud start-up has to address a number of key decisions, typically done as part of the start-up’s business plan. This is key to the start-up’s focused business opportunity and its ability to attract investors.

The start-up must develop the pricing and terms on which it provides its service such that they are acceptable to the customers.

Key factors for startups

The key factors customers look at in making a decision on a cloud service include:

  1. Whether the service meets the customer’s need.
  2. The cost of the service.
  3. The ability of the customer to control and own its data and be able to move from one vendor to another.
  4. The compliance by the cloud start-up with best practices in security of the customer’s data and personal information (often evidenced by compliance by the start-up with a leading international security standard or standards).
  5. The risk imposed on the customer by the start-up’s terms.
  6. For some customers the issue of where the data resides may be an issue.

A start-up offering an application requires third party software, services including a platform (often provided by a “platform as a service” provider) and infrastructure (also often offered by an “infrastructure as a service” provider). The start-up must do their due diligence on the services, standards and terms. Typically the start-up needs to ensure its offering to the customer is consistent with the terms, services and support it receives from such third parties. In that way the start-up seeks to manage its obligations to its service providers and its commitments to its customers.


This article should not be relied upon as legal advice - the comments may not be applicable to you and may not be up to date. If you have any questions, you should contact a lawyer.

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