Investment Analysis of the US IaaS Industry
As more enterprises overcome security concerns, demand for cloud storage and cloud based services is expected to increase rapidly.
This trend, combined with Mega Trends such as Smart Cities, Big Data, and Internet of Things (IoT), serves as a strong indicator of the demand for the infrastructure as a service (IaaS) industry, making it a viable investment opportunity.
High barriers to entry and economies of scale make it difficult for a single venture capital (VC) to invest in a start-up. However, VCs account for a large portion of deal volume by investing as a group or by investing in allied software to aid the IaaS industry.
Pricing pressure and the drive to increase market share are lowering profit margins. The increased demand is also influencing companies to marginally increase their reliance on debt for capital investments. However, the high free cash flow to firm (FCFF) conversion and cash reserves of companies in this industry compensate for these factors.
Companies within the content delivery network (CDN) segment are providing value-added services to attract and retain customers. Start-ups with key offerings in this segment are good choices for acquisitions and, thus, attractive investments.
Wholesale data centers are targeting smaller customers, thus affecting retail data centers. Such trends that affect the profitability of business models need to be carefully evaluated before making investment decisions.
About this report
The study analyzes the IaaS industry from an investor's perspective. Beginning with an introduction to the industry, the study focuses on various business models in this industry. The next section deals with the investment profiles in the industry, detailing the types of investments made in the industry during the study period. It also explores the kinds of exits and the success rate of investments. The study concludes with an introduction to each of the segments and their trends to help the investor gauge the potential of this industry. The study takes into account historical data from 2009 to 2014 to make projections for 2015.
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