Clould Startups And VC Startups: A Match Made In Heaven?

We wrote the headline after hearing Runa Capital, which describes itself as a new Russian venture capital fund, has invested $500,000 into Hivext.com, an application development platform based in the cloud. It’s Runa’s second investment since the firm launched in August 2010, and Runa plans on investing more in cloud and virtualization technologies. Our question: Can cloud investments continue indefinitely or are we heading for a cloud bubble?

For Hivext’s part, the press release says that they plan to offer developers an alternative to large cloud platforms like Microsoft Windows Azure and Google App Engine while supporting languages like Java and PHP.

What’s really interesting is Runa’s investment. Their press release indicates they want to invest $30 million in start-ups in tech sectors like “cloud computing, machine learning, virtualisation and mobile & internet applications.” And yet, in cloud computing, an industry where companies regularly boast of raising $5.5 million or $10 million, their investment Hitext investment ($500,000) seems nominal.

Still, cloud startups sometimes don’t need millions of dollars to get started. M-Dot Network built a basic offering on $86 and an idea, and went on to win the Amazon Web Services startup challenge. While the prize money was only $50,000 cash and $50,000 in service credits, it’s a solid start for a fledgling cloud business.

The point is that with lower overheads and less infrastructure requirement themselves (at least, if hosted elsewhere, as in the case of the AWS fans at M-Dot), cloud services themselves need less money to get started. But will that give VCs more bang for their buck? We’re watching.

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