The effect of introduction of Cloud Computing: The case of Venture Capital
|Author:||Bc. Jan Šomvársky|
|Year:||2016 - summer|
|Leaders:|| † prof. Ing. Michal Mejstřík CSc.
|Work type:|| Bachelors
|Awards and prizes:|
|Abstract:||The thesis aims to examine the impact of introduction of Cloud Computing on Venture
Capital (VC) financing in the United States. In the first part we review features of Cloud
Computing and their impact on startup costs in context of VC. In this thesis we consider
Amazon Web Services (AWS), introduced in 2006, a pioneer of widely accessible Cloud
Computing. In the second part we quantify the cost reduction associated with utilization of
AWS against owning IT infrastructure. Results show 529 fold decrease in startup costs in 3-
month time frame. In the third part we analyze the impact of introduction of AWS on seed
and later-stage investments in context of selected macroeconomic and technological factors.
We perform analysis on a comprehensive dataset from National Venture Capital Association
using Autoregressive Distributed Lag (ARDL) model to account for a change in lagged values
of dependent and independent variables. Main finding of our analysis suggests that seed
investments are significantly influenced by the introduction of AWS and subsequent drop in
startup costs. Specifically, the decline in cost of startup induced 29.67% increase in seed
investments. Further findings indicate insignificant relationship between seed investments and
macroeconomic factors. Moreover, according to our results, later-stage investments show no
significant relationship with introduction of AWS and associated cost reduction. The outcome
of the thesis is that introduction of AWS and subsequent startup cost reduction in 2006
significantly increased seed investments but did not influence later-stage investments.
Moreover, seed investments are not significantly affected by macroeconomic factors.