The Ultimate Guide to Cloud Service Provider Startup Programs
One of your biggest expenses as your software startup grows will be cloud hosting. Instead of building your product with on-premise servers, it’s often faster and easier to build on existing cloud architectures. This doesn’t come cheap though. As your product becomes more advanced, you will spend a lot of money here. Thankfully, many of these cloud service providers understand the unique constraints startups have to navigate. They offer credits to their platform to ease you into this expensive line item. By the end of this article, you should have a clear understanding of the cloud service provider startup credits landscape and how this can benefit your business.
Understanding Your Choices
Let’s start by clarifying who these companies are and why they work with startups. The top three cloud providers are Amazon Web Services, Microsoft Azure, and Google Cloud. There are others such as IBM Cloud, Oracle, and Digital Ocean (what we use), but this post will focus on the top three since they’re who we’ve worked with the most thus far. That being said, if you provide any of these services, please sign up and create a listing here and let’s help more startups together. We’ll keep this post updated as this evolves over time.
All three of the top providers offer generous startup programs. Vendors (we call all companies that work with startups vendors) like these essentially embrace a VC-model. They “invest” in many different startups by deferring their revenue from you as a customer. Their hope is that they earn your business early and you grow together. They may earn nothing from your first year as a customer or even longer. They sacrifice early revenue because they know your business could become tremendously valuable as you grow. Also, cloud services are generally sticky, so you’re less likely to switch services once you build your product on their platform.
Combine the stickiness, high cost, and your growth potential, and it’s a perfect recipe for a startup program.
Choosing a Cloud Provider for Your Startup
There are two ways to frame your choice of cloud service providers:
- Based on your business and in-house capabilities, which platform am I best equipped to use?
- Which cloud service providers are the most startup friendly?
In-House Cloud Capabilities
The first question really depends on your team and how you architect your product. Each cloud service provider has its own strengths and weaknesses. I’m far from an expert here and simply defer to your team’s judgment. What I can say is DO NOT choose your cloud provider strictly based on who has the best startup program. Credits on a platform you can’t effectively use is a waste. You won’t have the resources to take advantage of it. Failure to choose the right cloud provider can ruin your startup’s ability to deliver your product, which is unacceptable.
Where I am an expert is in understanding their startup programs. Here’s what we’ve seen so far:
Cloud Service Provider Startup Deals
Amazon’s AWS Activate Startup Program
AWS is by far the most requested and has one of the most famous and successful startup programs in the world. Their program AWS Activate has provided over $6 billion in credits to 280,000 startups since 2013. They defined the industry and have the ROI to prove it. Anecdotally, I can attest that they still pay a pretty penny to distribute AWS Activate in startup communities with a track record of successful high growth startups.
Unfortunately, AWS Activate is essentially on pause since Amazon’s budget cuts early during the COVID-19 pandemic. If a partner already has a well established relationship with AWS Activate, then those credits are likely still accessible. However, all new partnerships have been put on hold (from what we and others have seen). Much to our frustration, the credits available directly through the Startup Stack are only worth $1,000. They slashed our deal with them during COVID with no explanation and no ability to renew it since then. In lieu of this, we rely on software development studio partners who sometimes have better access to AWS Activate credits than we do. However, if you’re in any startup ecosystem offering more credits, go with whoever has access to the most.
AWS is so popular that we offer deals from many services whose singular purpose is to help you save money on your cloud spend. They do this in two ways:
1) By joining a consolidated database organization, which shares the bill for the cloud infrastructure. Bringing many companies under one shared account creates a group buying pool that reduces expenses. We recommend working with Pump. Their service is free and offers a guarantee that you can’t lose money because of them. They’ll even pay you back in AWS credits if necessary. It’s a really cool model and is an option every founder should consider. This is a great option to consider if you spend under $100,000 per year on AWS.
2) By working at the billing layer of your AWS infrastructure to improve your cost optimization. This is what Usage AI does. Working with them is a no-brainer because they only charge you based on the savings they can get you. Their solution is great if you spend over $100,000 per year on AWS.
Usage AI and Pump both support AWS savings and can sometimes be synergistic. If you’re looking to optimize your spend, it can be worth speaking with both companies if you don’t know exactly what you need yet.
Microsoft for Startups vs. Google Cloud for Startups
Both Microsoft for Startups and Google for Startups Cloud Program are aggressively expanding their startup programs, much to your benefit. Both offer expansive product suites that include cloud credits along with their many other services (such as GSuite or Office 365). Each company offers a tiered program, offering you different amounts of credits based on your funds raised, business model, cloud needs, and future prospects. AI startups qualify for the maximum amount of credits. Both companies advertise savings of up to $350,000 if you’re an AI startup.
If I had to pick one that’s making more moves to win a startup's business, I’d give a slight advantage to Google for Startups Cloud Program. They’ve been the most proactive in empowering organizations like the Startup Stack to promote their program, and I’m optimistic about what’s on their roadmap. I see them supporting startup community events like their SaaStr 2023 booth (printing my face onto a cookie was a nice touch). That being said, Microsoft for Startups comes with the full force of the Microsoft Office Suite, which your business will certainly need. They have a growing community and suite of resources regularly being added to make Microsoft for Startups a formidable value add to your business if you’re accepted into the program.
One More Consideration
We’ve talked a lot about the top 3 cloud service providers, but what about DigitalOcean? The Startup Stack runs on DigitalOcean, and we frankly love it. We pay <$20/month and it takes care of all our needs. We know they can continue to meet our needs as our business grows. Our website is fast (we hope you see that too) and DigitalOcean has been wonderful to work with. They also have Hatch Digital Ocean for Startups with 2,000+ startups participating. We hope to partner with them soon and will update this article with our partnership details and links if it becomes available.
There are many other cloud service provider startup programs that deserve mentioning. We’ll link to them below and update this article with any new partnerships as they form.
- IBM for Startups
- Cloudflare for Startups
- Linode Rise for Startups
- Oracle for Startups
- Alibaba Cloud Startup Catalyst Program offers up to $120k in credits to their platform.
No matter who you work with, remember that those startup credits will eventually dry up. You will be a full paying customer for your cloud services provider at some point. Have the mindset that your business will be married to your cloud service provider and choose wisely. No matter who you choose, please take advantage of the startup credits available to you.
This article will be updated based on program updates and expert feedback. Email us at info@startupstack.com with a link to this article to suggest any changes to this. Our goal is to help startups make well informed decisions. We reached out to cloud architecture and our points of contact at these companies in writing this article.
