Last year was a difficult one on many levels, but the opportunities for startup companies actually improved.

Venture capital funding in 2020 increased 14%, and 66 venture-backed firms achieved “unicorn” status, a private company valuation above $1 billion. That still doesn’t change the harsh reality of survival. Seventy-five percent of venture-funded startups fail, and 77% faced potential failure in 2020.

Yet, the broader picture still offers a silver lining for much of the world when it comes to the ambitions of startup entrepreneurs. As the global economy begins to emerge from the impact of a global pandemic, the work of startup companies has gained added significance. It provides a fertile ground for experimentation and the hope that bold new ideas will become game-changing innovation.

“Startups are important because, as we come out of COVID and the economy is recovering, it’s a great way for engineers and companies to try different things out,” said Jerry Chen, partner at Greylock Partners. “Think of startups as running multiple experiments at the same time across the globe trying to figure out how to do things better, faster, cheaper. A lot of startups don’t work, unfortunately, but a lot of them turn out to be multi-billion-dollar companies.”

Chen spoke with John Furrier and Dave Vellante, co-hosts of theCUBE, SiliconANGLE Media’s livestreaming studio, during today’s opening session of the AWS Startup Showcase Event: Innovators in Cloud Data. Furrier and Vellante also spoke with Jeff Barr, vice president and chief evangelist at Amazon Web Services Inc.; Jeremy Arnon, senior partner development manager at AWS; and Michael Liebow, cloud platform leader at McKinsey &Co. in separate interviews. They discussed how cloud platforms provide critical support for startups, a recent report that quantifies cloud’s potential business value, technology’s contribution to world health and the expanding scale of innovation being witnessed today. (* Disclosure below.)

Trillion-dollar value

With an array of cloud services on the market, founders of startup companies have a more extensive platform on which to launch a new venture than did their predecessors of a decade or two ago. Compute, storage, databases and machine learning are all just a click away.

“We’re in this incredible time right now where it’s so easy to get those basic resources,” Barr said. “They are really looking at cloud as part of a bigger picture. In Amazon terms, we’d say they are thinking big, looking beyond who they are and where they are to what they could be and what they can grow into.”

That growth is helping to fuel a cloud computing industry that is redefining the meaning of business value. In February, McKinsey released a report — “Cloud’s Trillion-Dollar Prize Is Up for Grabs” — that forecast a more than $1-trillion run rate earnings before interest, taxes, depreciation and amortization across Fortune 500 companies by 2030.

The report’s quantification of business value highlighted the key role that emerging technologies, such as machine learning, quantum computing, edge processing and the blockchain, can play in driving success for enterprises.

“The business value is 2x the technical value of cloud, and there is a whole unlock of additional value where organizations can pioneer on some of the newest technologies,” Liebow said. “Cloud democratizes compute. It provides these capabilities, and small companies with the skills can leverage these ahead of slow-moving incumbents. Organizations specific around the Fortune 500 that aren’t leveraging these capabilities today are going to get left behind.”

Largest vaccination drive in history

For some firms, embracing capabilities early can accelerate product development at a critical time not just for the business, but for the world. The McKinsey report cited the example of Moderna Inc., which made a decision to build its mRNA research and development platform on the public cloud and create what the company’s chief executive labeled “software for life.”

The ability to quickly analyze and design mRNA sequences for protein targets has contributed to the largest vaccination drive in U.S. history.

“They couldn’t have delivered the vaccine as fast as they did without cloud,” Liebow said.

For venture capitalists such as Chen, the Moderna example merely confirms what he has seen among the startup firms he invests in. The cloud offers the most suitable choice in a fast-moving world governed by data and application-powered workloads.

“The way you build apps is very different in the cloud than the way you build apps on-premises,” Chen said. “For a vast majority of startups and a vast majority of customers, the network effect you get from being in the cloud, the network effect you get from having everything in this elastic cloud service outweighs any other cost.”

Providers such as AWS have a front-row view of the innovation taking place, as companies, such as the fast-emerging Snowflake Inc., build entire global businesses on the cloud platform. The elasticity offered by hyperscalers has created an environment where the sheer magnitude of activity becomes difficult to comprehend or quantify.

“It’s kind of amazing when you hear the scale of requests per day or per month,” Barr noted. “We toss around terms like trillions or quadrillions like they’re pennies. Fifteen-plus years into this, I still wake up every morning thinking about what cool new thing I’m going to get to learn and write about today.”

Barr won’t have long to wait.

“We’ve been looking for ways to highlight all of the great work that startups are doing,” Arnon said. “We’re making this a quarterly series, and the next one is Wednesday, June 16, so mark your calendars.”

Here’s the complete video discussion, part of SiliconANGLE’s and theCUBE’s coverage of the AWS Startup Showcase Event: Innovators in Cloud Data. (* Disclosure: Amazon Web Services Inc. sponsored this segment of theCUBE. Neither AWS nor other sponsors have editorial control over content on theCUBE or SiliconANGLE.)

Image: Pixabay Commons