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how common is it for venture funds to buy bulk cloud services for use in startups they own/invest in?

by aussieguy1234 2y ago

foolfoolz 2y ago
very common. we had many thousands of dollars in cloud provider credits through our investors
- Narkov 2y ago
  Not sure many VC's are actually spending money to get those credits versus being given them for free as a promotional tool.
Astroboy007 2y ago
i think A16z has a similar model but I believe they own the servers themselves
alephnerd 2y ago
Very common. All the major CSPs have dedicated Startup and VC GTM teams for this reason. For example, Thoma Bravo's VC fund would give a 10-20% discount on a certain major CSP's compute because of the parent fund's significant stake in that company.
stingraycharles 2y ago
Extremely common, to the point that all major cloud vendors have special VC programs.
Eridrus 2y ago
I have no idea why people are saying this is common. There are plenty of cloud credits programs for startups from GCP, etc, but they are not funded by VCs, they are sales & marketing programs funded by the cloud vendors. A small minority of VCs (AI Grant, a16z, and now YC) have been using their funds to help startups get access to GPUs specifically for the last year and a bit, but there's no need to do a similar thing for general cloud services where there is no shortage.
- ignoramous 2y ago
  > sales & marketing programs funded by the cloud vendors... The more serious ones have their CEOs do the selling: https://www.youtube.com/watch?v=6nKfFHuouzA https://www.youtube.com/watch?v=6nKfFHuouzA / https://ghostarchive.org/varchive/6nKfFHuouzA https://ghostarchive.org/varchive/6nKfFHuouzA
hodgesrm 2y ago
> how common is it for venture funds to buy bulk cloud services for use in startups they own/invest in? Outside of this article, I've never heard of it. In fact it seems kind of illogical because VCs don't necessarily know which infra tech to invest in. (Not their job.) What VCs will do is connect you with public cloud vendor programs for startups or get you access to favorable discounts that are not generally available for small companies. My company benefited from both of these. Edit: clarity
- wmf 2y ago
  One upside of a monopoly is that it's obvious which tech to use.
  - warkdarrior 2y ago
    Google is not a monopoly in Cloud, nor in AI, nor in cloud AI.
    - wmf 2y ago
      I meant CUDA. (Although in this case Google is also throwing in TPUs.)
      - varelse 2y ago
        [dead]
  - aleph_minus_one 2y ago
    > One upside of a monopoly is that it's obvious which tech to use. Not in the tech of the monopoly, since disrupting the monopoly enables you huge cost savings (example: in its formation years, Google used of-the-shelf computers hold together by Velcro tape instead of expensive servers by the big vendors).
- richardw 2y ago
  Here’s another: A16z building a stash of GPU’s: https://www.theinformation.com/articles/andreessen-horowitz-is-building-a-stash-of-more-than-20-000-gpus-to-win-ai-deals https://www.theinformation.com/articles/andreessen-horowitz-...
adelpozo 2y ago
A16z seems to have bought 20K GPUs to be used by the startups they fund. https://www.theinformation.com/articles/andreessen-horowitz-is-building-a-stash-of-more-than-20-000-gpus-to-win-ai-deals https://www.theinformation.com/articles/andreessen-horowitz-... (July 9) Sorry for the direct link, couldn’t get archive.is to work with this one.
jedberg 2y ago
It's not common, but not unheard of. Nat Friedman and Daniel Gross own a cluster of GPUs that they rent back to their startups for below market rates. They essentially trade GPU time for equity. Index Ventures has a deal with Oracle to provide GPUs at no cost to their startups (they pay the bill).
- morgante 2y ago
  > Nat Friedman and Daniel Gross own a cluster of GPUs that they rent back to their startups for below market rates. Not just their startups btw.
- leohonexus 2y ago
  Link to the cluster's specs: https://andromeda.ai/ https://andromeda.ai/

how common is it for venture funds to buy bulk cloud services for use in startups they own/invest in?

foolfoolz 2y ago

very common. we had many thousands of dollars in cloud provider credits through our investors

Narkov 2y ago
Not sure many VC's are actually spending money to get those credits versus being given them for free as a promotional tool.

Astroboy007 2y ago

i think A16z has a similar model but I believe they own the servers themselves

alephnerd 2y ago

Very common. All the major CSPs have dedicated Startup and VC GTM teams for this reason. For example, Thoma Bravo's VC fund would give a 10-20% discount on a certain major CSP's compute because of the parent fund's significant stake in that company.

stingraycharles 2y ago

Extremely common, to the point that all major cloud vendors have special VC programs.

Eridrus 2y ago

I have no idea why people are saying this is common. There are plenty of cloud credits programs for startups from GCP, etc, but they are not funded by VCs, they are sales & marketing programs funded by the cloud vendors. A small minority of VCs (AI Grant, a16z, and now YC) have been using their funds to help startups get access to GPUs specifically for the last year and a bit, but there's no need to do a similar thing for general cloud services where there is no shortage.

ignoramous 2y ago
> sales & marketing programs funded by the cloud vendors... The more serious ones have their CEOs do the selling: https://www.youtube.com/watch?v=6nKfFHuouzA https://www.youtube.com/watch?v=6nKfFHuouzA / https://ghostarchive.org/varchive/6nKfFHuouzA https://ghostarchive.org/varchive/6nKfFHuouzA

hodgesrm 2y ago

> how common is it for venture funds to buy bulk cloud services for use in startups they own/invest in? Outside of this article, I've never heard of it. In fact it seems kind of illogical because VCs don't necessarily know which infra tech to invest in. (Not their job.) What VCs will do is connect you with public cloud vendor programs for startups or get you access to favorable discounts that are not generally available for small companies. My company benefited from both of these. Edit: clarity

wmf 2y ago
One upside of a monopoly is that it's obvious which tech to use.
- warkdarrior 2y ago
  Google is not a monopoly in Cloud, nor in AI, nor in cloud AI.
  - wmf 2y ago
    I meant CUDA. (Although in this case Google is also throwing in TPUs.)
    - varelse 2y ago
      [dead]
- aleph_minus_one 2y ago
  > One upside of a monopoly is that it's obvious which tech to use. Not in the tech of the monopoly, since disrupting the monopoly enables you huge cost savings (example: in its formation years, Google used of-the-shelf computers hold together by Velcro tape instead of expensive servers by the big vendors).
richardw 2y ago
Here’s another: A16z building a stash of GPU’s: https://www.theinformation.com/articles/andreessen-horowitz-is-building-a-stash-of-more-than-20-000-gpus-to-win-ai-deals https://www.theinformation.com/articles/andreessen-horowitz-...

adelpozo 2y ago

A16z seems to have bought 20K GPUs to be used by the startups they fund. https://www.theinformation.com/articles/andreessen-horowitz-is-building-a-stash-of-more-than-20-000-gpus-to-win-ai-deals https://www.theinformation.com/articles/andreessen-horowitz-... (July 9) Sorry for the direct link, couldn’t get archive.is to work with this one.

jedberg 2y ago

It's not common, but not unheard of. Nat Friedman and Daniel Gross own a cluster of GPUs that they rent back to their startups for below market rates. They essentially trade GPU time for equity. Index Ventures has a deal with Oracle to provide GPUs at no cost to their startups (they pay the bill).

morgante 2y ago
> Nat Friedman and Daniel Gross own a cluster of GPUs that they rent back to their startups for below market rates. Not just their startups btw.
leohonexus 2y ago
Link to the cluster's specs: https://andromeda.ai/ https://andromeda.ai/