Independent Cloud Powers Rising Tech Start-Ups in Latin America
Aug 09, 2023

Companies spend hundreds of billions of dollars annually on cloud services, leveraging vast, on-demand computing resources to drive the next wave of technological disruption in areas such as artificial intelligence (AI) and machine learning (ML).

Currently, Latin America is undergoing a revolution in cloud technology, with public cloud spending rising 85% from 2021 to 2022, according to a study by Bessemer Venture Partners. Today, there are more than a dozen cloud regions in Latin America, 10 of them built as of 2020, according to S&P Global Market Intelligence.

The growing digitization of the economy is a driving force behind this trend, as companies and governments recognize the benefits of cloud services for core needs such as compute and storage, and the growth of cloud-native applications will likely support accelerated demand in the coming years.

Hyperscale cloud providers dominate the global public cloud market, but many digital start-ups increasingly find that relying on Big Tech vendors is too expensive and overly-complicated for their purposes. The rise of independent cloud computing platforms is changing this paradigm by providing an easier and more cost-effective option for agile, innovation-focused firms.

For a growing number of developers, start-ups, and large enterprises, independent cloud providers offer an ideal way to address their cloud compute, cloud storage, and networking needs. Independent vendors aim to simplify cloud consumption by providing easy-to-use, low-cost, and high-performance cloud services – helping businesses of all sizes to rapidly build, deploy, and scale innovative applications.

The power of the independent cloud enables these companies to successfully bring new solutions to market in fields as varied as AI and machine learning, finance, media, and communications.

Big Techs or Independent Providers?

Cost and simplicity are the primary selling points of these independent cloud providers. Large traditional hyperscale cloud platforms are significantly overpriced, putting increasing pressure on a company’s margins as it scales.

Among software companies, cloud spend routinely accounts for 75 to 80 percent of their cost of goods sold, as revealed by venture capital firm Andreessen Horowitz (a16z). Companies in Latin America spent $19 billion on public cloud services in 2022, making up 12 percent of total IT spend – according to Bessemer Venture Partners – a proportion that is higher than any region except North America.

The biggest cloud providers are focused on meeting the demands of the richest companies and governments. They offer hundreds of ancillary products that the vast majority of digital start-ups simply don’t need. The Big Tech vendors are therefore overbuilt for the vast majority of cloud workloads, leading to a user experience that can be confusing and overwhelming while dampening productivity and margins for start-ups.

For start-ups looking to scale their cloud-native and generative AI applications, independent cloud services offer an alternative without the cost, complexity, and vendor lock-in that comes with Big Tech cloud services.

Free to innovate

Can Stock Photo's successful migration of more than 600TB of data from a traditional Big Tech cloud to Backblaze and Vultr demonstrates how independent cloud platforms can not only unlock savings for growing companies but also free them up to focus more on innovation.

The company, one of the earliest microstock agencies on the internet, decided to move its collection of image and video files into Backblaze B2 Cloud Storage and its image processing application to Vultr after running into several major issues with Big Tech's infrastructure.

These problems included a complex and costly pricing model, the prospect of vendor lock-in as the business accrued more data, and the delays and costs associated with their cold storage setup. The transition to Backblaze and Vultr proved to be seamless, and Can Stock Photo was able to reap huge benefits from the switch. The team found they could generate video files for customers four times faster than before, while achieving 55 percent cost savings for monthly storage and eliminating retrieval costs for cold storage files.

"With Backblaze, our business is in a more nimble position,” Duncan Enman, founder & CEO of Can Stock Photo noted. "We can react to the market easily, and we reduced operating costs for storing and processing video while creating a better end user experience.” Jettisoning the complexity and expense of Big Tech in favor of independent cloud platforms also allowed the company to sharpen its focus on the video space as well as innovating ways to better serve its customers and content creators.

Fueling start-ups

Tech start-ups can now experience the power of the cloud – without any of the hyperscaler bloat – more easily than ever before. Vultr, the world’s largest privately held cloud computing company, has introduced new programs to help start-ups build agile cloud operations that can scale and evolve to meet their needs at every stage.

In June, the company launched the Vultr Cloud Alliance, which includes a new marketplace of plug-and-play services from leading Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS) providers. The alliance pools the offerings of founding partners Cloud 66, Backblaze, Domino Data Lab, and Console Connect, featuring one central portal and an intuitive control panel that makes it easy to deploy composable, enterprise-grade cloud infrastructure and add services from virtually anywhere in the world.

The company also rolled out its Vultr VIP Digital Start-up Program, an initiative designed to boost digital start-ups and scale-ups with benefits such as free credits for organizations to get started on their Vultr migration. Vultr’s expanding global footprint of 32 cloud data center locations – including sites in Mexico City, Santiago, and São Paulo, which opened in 2021 – is helping tech start-ups in Latin America and around the world thrive and innovate.

The need for flexible cloud services is ever more apparent in Latin America, where venture capital investment reached $7.8 billion last year, up 85 percent from 2022, according to the Association for Private Capital in Latin America. As start-ups discover the advantages of independent cloud, more tech visionaries in the region will have the resources they need to turn possibility into reality.

Contact our sales team to get started and learn more about Vultr’s commitment to providing accessible, high performance cloud infrastructure in Latin America.