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How Cloud86 secured a financing line with re:cap to scale their web hosting business

Impact

Cloud86
in a nutshell

Founded in 2019, Cloud86 is hosting provider, which is based in the Netherlands. Cloud86 focuses on LiteSpeed, a relatively new technology in the hosting ecosystem. With a dedicated team of nearly 20 employees, they take care of 20,000 customers, delivering crucial hosting elements: speed, uptime, and customer support.

The challenge 

Scale the business and attract new customers while maintaining independent and keeping ownership

Coud86, a startup initially funded through loans from friends, family, and founder’s equity, embarked on an ambitious growth strategy in 2022.

The co-founders, Maurice Graber and Gideon Vergouwe focused on marketing initiatives like affiliate marketing, social media, and search ads. “These marketing efforts were successful and had a measurable impact on our business,” stated Maurice. 

However, with the increase in customers, Cloud86 realized the need to adjust its operations to accommodate the growing demand, resulting in investments in customer support and new servers – two foundations of their success.

Case Study: re:cap and Cloud86
The Cloud86 founders: Gideon Vergouwe (left) and Maurice Graber (right).

“We have always prioritized uptime and performance for websites, so we invest heavily in our core product by purchasing the best high-end hardware the market has to offer,” Gideon said. 

The growth path that Cloud86 has taken is set to continue in 2023. The Netherland-based company aspires to further invest in its growth and scale its business, to increase its customer base significantly by 2026.

Maurice emphasizes,

“To achieve this, we sought an external and reliable partner to provide us with debt funding.”

Since the company wanted to maintain its independence and ownership, venture capital wasn’t an option for the founding team. They were searching for a debt-based alternative. This was when Cloud86 got in touch with re:cap via LinkedIn. 

“After the first meetings, we were convinced that re:cap is a trustworthy partner and a provider who understands our unit economics, metrics, and the market we operate in,” explained co-founder Maurice.

The solution

Tailored funding solution aligned with their growth strategy and business needs 

Scaling a hosting business demands fast and efficient hosting, which requires upfront server investments. While initially costlier than relying on rented servers, owning your own servers proves more economical and a better performance in the long run. And that is the approach taken by Cloud86.

The path forward for the Dutch startup is clear: Continuously investing in marketing instruments like affiliates, social media ads, and search ads to attract more customers while simultaneously scaling their business by hiring the best customer support staff and acquiring new servers. 

To fuel these plans, Cloud86 leverages re:cap’s funding. re:cap’s experts developed a funding strategy with different scenarios for Cloud86.

“We were impressed with re:cap’s focus on our real-time data, unit economics, and business performance to provide us with funding. They have taken a look into the future but at the same time kept an eye on our previous performance and our solid customer base”, Maurice explained.

Gideon added:

“We can optimize our cash flow with re:cap. I can finally purchase assets to offer the best experience for our customers. It helps to keep the edge on our competitors.”

Another advantage for the Dutch company was the introduction of newly launched re:cap benchmarking. 

With the dashboard they get a bigger picture of their business and metrics help them to unlock granular financial insights of their business. “With these tools, we can better steer our financial metrics, gain insights into our business decisions, track our progress, and create a more informed decision template for our growth initiatives.” 

re:cap’s funding approach involves providing multiple smaller amounts of cash that align with the company’s actual capital needs instead of one bigger sum that sits idle in the bank. “This efficient way of funding allows us to access money exactly when we need it, and the entire process takes only a few days,” Maurice highlighted. 

The idea behind it is simple.

Most companies rarely require a large, single amount of cash because it leads to higher capital costs and has a negative impact on capital efficiency. 

“I’ve seen companies receive substantial funding all at once, only to invest in areas that didn’t contribute to their growth, such as hiring people,” shared Maurice.

“It’s essential to be strategic and thoughtful about when and how much funding is needed.”

So far, Cloud86 has received multiple fundings from re:cap, making up a total of 450,000 Euros – and there is more to come as re:cap is a strategic long-term partner financing the company's growth. Maurice appreciates having a funding line that allows him to draw smaller amounts “precisely when our business needs it.”

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