If you are running a demo or test lab, and you need some additional economical storage for backups, then you might think “I’ll use a USB drive”. However, DPM (and therefore Azure Backup Server) do not support adding a disk on a USB controller as a backup target. I struggled with this, and then it hit me this morning.
Storage Spaces will abstract that the disk is connected via USB 
I connected the disk, made sure it was unformatted and offline, launched Server Manger and created a pool from the primordial pool. I then create a simple virtual disk from the pool, and chose not to format it. Back into Azure Backup Server, and I was able to add the disk as a backup target.
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Creating a VHDX on USB drive and mounting it should also work. I think it was Ben Armstrong who wrote about this workaround, in his case to get dedup working on removable media.
Didn’t work for me – that was the first thing I tried.
Presenting it through iSCSI works as well. Sure it’s slow but it does indeed work