Cloud Credits: A Guide for Startups To Maximize Benefits and Avoid Pitfalls
Tags: startup, credits, productivity, aws
Published: 2023-07-25 09:38:54


Scaling your startup using the cloud is easier than ever before. With the availability of cloud credits, startup founders can cover their cloud operational costs for up to two years, choosing their preferred provider. The startup programs offered by the leading cloud providers have played a crucial role in helping numerous startups experience exponential growth and deliver modern cloud-based solutions to customers worldwide.

Both AWS and GCP offer cloud credits to startups ranging from bootstrapped ventures to those at the Series A stage. If you haven't acquired credits yet, we recommend checking out our article on how to obtain free credits [for AWS](https://www.argonaut.dev/blog/aws-free-credits) and [for GCP](https://www.argonaut.dev/blog/gcp-free-credits).

In this article, we will explore the ways in which these credits can benefit startups. We will then delve into a detailed understanding of the programs and provide insights on how to maximize their potential. Lastly, we will highlight common pitfalls to avoid when utilizing cloud credits.

## How do cloud credits help startups?

The importance of startup cloud credits for early-stage businesses lies in the following aspects:

1. **Offsets Initial Infrastructure Costs:** Startups can optimize their budget by utilizing startup credits provided by cloud service providers, which help offset initial infrastructure costs such as computing resources, storage, network infrastructure, and essential services. This strategy enables startups to reduce upfront expenses and allocate their limited financial resources toward crucial areas such as product development, marketing, and talent acquisition.
1. **Experimentation with Advanced Cloud Services:** Startup credits opportunities to explore and experiment with the diverse range of services and tools offered by cloud platforms. Including the latest in AI, ML, Big data, and serverless.  Access to such cutting-edge tools and technologies can give startups a competitive edge, help them innovate, and enhance their overall capabilities.
1. **Scalability and Flexibility:** Cloud computing provides startups with the ability to scale their operations quickly and efficiently. Startup credits allow early-stage businesses to access scalable resources and infrastructure, ensuring they have the capacity to accommodate growth as their user base and demand increase. The flexibility provided by cloud services helps startups avoid upfront investments in fixed infrastructure and allows them to adjust their resources based on fluctuating requirements.
1. **Enhanced Reliability and Security:** Startups, especially those in their early stages, may lack the necessary expertise or resources to implement robust security measures on their own. By utilizing startup credits, they can benefit from the established security practices and robust infrastructure provided by cloud providers.

Overall, startup credits provide a valuable opportunity for early-stage businesses to minimize infrastructure costs, experiment with cloud services, and scale their operations efficiently. By leveraging these credits, startups can accelerate their growth, focus on core business activities, and leverage the capabilities and expertise of established cloud service providers.

## How do these programs work?

### Application review timeline

AWS reviews applications within 7-10 business days. Microsoft reviews applications within 5-7 business days. GCP reviews applications within 3-5 business days. You will receive an email with further details on redeeming the credits for your respective cloud. If you are rejected, you can reapply after 14 days (Microsoft). Google and AWS don’t openly specify terms for reapplication. You can reach out to their support team to take another shot at the credits. You will usually also receive a reason for rejection along with the rejection email.

### Tiered credits

Most of the startup credit programs have a tiered credit offering. It starts off by creating an account with the cloud provider of your choice, then you enroll in the credits program, which is usually by filling out a form, and then your application is reviewed. Usually, a basic amount, say $5000 worth of credits, is given to the startup for their first few months of usage. However, if you have more demanding usage, you can request higher credit which will then be evaluated.

### Requesting more credits

In the case of tiered credits, you are allowed to request credits multiple times until you reach the maximum amount ($100,000 for AWS). If you had already been offered $5,000 and in your subsequently applied for $25,000, you will receive the difference between the two credit awards, i.e., $20,000. Each request has to be for an amount higher than the previous request. Requesting can be done through the same form as your initial request. 

> 💡 See [the requirements](https://foundershubsupportcenter.powerappsportals.com/article/KA-01143) for the various levels of Microsoft for Startups Founders Hub.

### Credits expiry

All cloud credits come with an expiry date. If you received credit codes from a developer community program, they would have to be redeemed within 60 days from when you received them. The expiry date of the credits is usually one year from the moment you apply them to your account. You can also check the credit utilization and expiry date on the billing console. Users will also receive emails when they are about to run out of credits or get closer to the expiry date. 

If you have multiple credits expiring at different times, the one expiring sooner will be applied first to your upcoming bills. More on that [here](https://docs.aws.amazon.com/awsaccountbilling/latest/aboutv2/useconsolidatedbilling-credits.html).

## Pitfalls to avoid

### Turning a blind eye to cloud costs

With thousands in cloud credits, you may start adding more services from the provider. You may also end up over-provisioning (choosing bigger instance types than you actually need). These practices don’t sting you until the day your credits expire. Some may continue paying for cloud services, which could become wasteful spending. It would also be a bigger and more time-consuming effort to evaluate and optimize these resources later on in your product’s lifecycle.

Our recommendation is to start off small, only provision the resources, and use services that are essential for your operations. Try to stay within the free tier of certain services whenever possible. Be in control of who has access to provide services and for what purposes. Imagine you are actually paying for the cloud services so that it doesn’t end up as a shocker expense once your credits run out.

### Using latest versions

Though most cloud services nowadays are launched with sufficient documentation, it is recommended to wait 6 months to a year before trying out new services in a prod setting. Dealing with difficulties in setting up or finding public guides to troubleshoot your issues might become more difficult for newer services.

Our recommendation is to stick to services that you and your team are familiar with or can easily adopt. Choose solutions that have been GA for at least a few months, and have sufficient community support.

### Poor product quality

With free credits for years and investor money in hand, it would surely feel like anything is possible. You can deploy your app frequently and add 20 new features to the roadmap each quarter. This might also lead to you hiring more engineers and creating a false sense of growth. The day you run out of investor money and cloud credits, your bills skyrocket, and you are left firing people and having incomplete features everywhere.

Our recommendation is to have a lean product management approach and focus on building features that work well for your customer today. Put in equal efforts in marketing and sales to achieve a product market fit before taking on more ambitious feature additions to your product.

### Overcomplicating your solution

When utilizing cloud credits for your startup, it's crucial to be cautious about overcomplicating the solution. This can happen if there aren’t many experienced engineers/architects on the team. While the cloud offers scalability, flexibility, and cost savings, it's important not to take these advantages for granted. Poorly managing your cloud setup can result in various problems, such as wasted resources, security vulnerabilities, and unnecessary complexity. Moreover, there is a possibility that your credits may run out, leaving you with unexpected expenses or even service outages.

Our recommendation is to have proper oversight and management of your cloud infrastructure from day one. This entails establishing robust monitoring and alerting systems to effectively track resource usage, performance metrics, and potential security threats. Additionally, if you have limited familiarity with cloud technology, opt for simpler solutions like DigitalOcean.

### Ignoring best practices

If you believe you are a startup and hence you have to do everything differently, think again. Ignoring best practices in matters such as GitOps, testing,  CI pipelines, security, observability, and Infrastructure as Code will only set you back in the long run.

Our recommendation is that you try and incorporate best practices for each of these from day one and put in sufficient research before getting started with running your apps on the cloud. Many of these services and their providers also have additional costs associated with them, be mindful of that and include it in your cloud budgeting.

### Not preparing for the first bill

Your cloud credits will inevitably come to an end, and you may not be ready to digest the huge amount that shows up on your first cloud bill. If you have had a product for several months now or even years, it is likely that you already have a way of funding your operations. 

Our recommendation is to be prepared for the bill by keeping your team informed about the usage and costs incurred. Export the cost data from the start and constantly monitor how it changes as you scale. Explore if there are other cheaper alternatives and experiment with them before going into your first bill. 

Use open-source solutions where possible and third-party data stores so you can step away from the cloud provider and leverage another year or two of free credits from another cloud provider.

## Conclusion

In conclusion, leveraging cloud credits has become a game-changer for startups looking to scale their operations. By utilizing these credits, startups can offset initial infrastructure expenses, experiment with advanced cloud services, and benefit from scalability and flexibility. Moreover, cloud credits provide enhanced reliability, security, and access to cutting-edge technologies. 

However, it's important to be mindful of potential pitfalls such as overlooking cloud costs, overcomplicating solutions, and ignoring best practices. By being proactive, prepared, and strategic in utilizing cloud credits, startups can accelerate their growth, focus on core business activities, and maximize their potential for success in the cloud computing realm.

[Argonaut](https://www.argonaut.dev/) platform enables you to build your apps on AWS and GCP, while acting as a central place for managing infra resources, deployment pipelines, app configurations, and more!