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Widespread use Adoption in multiple geographies shows that the cloud is not a one-market player but can scale to a global level.

It's Cloudy, but When Will It Rain?

The innovation coming out of the cloud computing market has, in many ways, made infrastructure startups interesting to venture capitalists again. Despite our excitement over the potential of cloud computing to transform IT,ghd hair straighteners, however, weighing on the minds of many in the VC community is what sort of time frame we should expect for exits. To put it more bluntly, we want to know when it’s going to rain&mdash,ugg shop;when VC investments in cloud computing will result in acquisitions or even an initial public offering.

Consider Slicehost. It was acquired by Rackspace after just two years of operations, during which its user base grew to over 15,ugg classic,000 from nothing. Such rapid customer growth, combined with strong business metrics and hosting services that were complimentary to those of Rackspace made clear the value proposition of buying Slicehost. And Rackspace got a great deal — the combined purchase price of Slicehost and another acquisition announced at the same time, Jungle Disk, was around $11.5 million.

Low churn Keeping existing customers lowers the cost of acquiring news ones—and proves that people will continue to pay for the company’s cloud services.

In order for a cloud computing company to make it rain, there needs to be evidence that it has the potential to take a market by storm. After talking to a number of large incumbents that could be acquirers of cloud startups, the key items that would drive them to an acquisition are:

The hype surrounding cloud computing is creating upward pressure for the industry to produce rainmakers. And there are a lot of cloud startups forming—at Panorama, I see a venture-funding pitch from at least 10 new startups every week, at least half of which are cloud startups working in the Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) spaces.

Sustained revenue growth Monetization of the customer growth. Even Twitter has a monetization strategy now, and acquirers are looking for clouds that are accretive to revenues.