The ability of the tech sector to produce outrageous profits is unperturbed and extraordinary. Companies that have created histories such as Facebook and Uber are great examples for every investor who wants to invest in tech to become a part of the history-making. In the following article, we understand why investing in tech startups is the secret ingredient to achieving great success.
From starting as a startup to now becoming one of the most celebrated tech giants in the world, there are companies that have created history. The impact has been such that the world’s top 5 most valued companies are all tech-based – Facebook, Amazon, Apple, Google, and Microsoft. According to a study done by McKinsey, the economic profits of the tech sector have grown exponentially, more than a hundredfold from 2000-2014. One doesn’t have to be a venture capitalist to invest in a tech startup – people who are interested can choose angel investing as a way to invest in the company in its early stage. Successful startups such as Airbnb and Twitter have scaled swiftly to become the world’s most recognized tech firms. The question here is what is the secret behind the success of these tech startups and why investing in tech might be the right option for you?
The Pace of Acceleration & Expansion of Growth
The pace of technological innovation is faster than ever – technology is now at the center of the digital era and development. The integration of the internet into our daily lives, the increase in the usage of smartphones, and the access to connectivity from across the globe have changed the way we learn, live, and interact. A Deloitte report has revealed that firms that have become part of the digital age have made growth in their revenue by at least 4% compared to other companies. Be it in any part of the globe, the secret ingredient of making a successful tech investment is to be aware of all technological developments that are shaping our world. This includes being well informed about different tech sectors, starting from the ever-evolving A.I. to the future of upcoming tech, like 3D printing. With the help of technological processes, startups are aiming towards growth, value creation, and creating a global impact, such as Amazon in retail or Uber in transportation.
The Amount of Investment is also Important
While it may be a great thought to invest in a great company like Apple, it may not be an ideal situation. The reason behind it is that an investor will be more likely to make better profits for the longer term if they invest in a tech startup. Tech startups usually require lesser investments compared to other sectors. This means that even the investors that are putting their money at an early stage, are likely to generate greater profits in the future if the venture turns into a success story. If the option is to choose between investing among thousands of other investors in a big tech company and being one of the few great creditors in a startup for the same amount – it is the latter that might result in better financial growth.
What is the Return of Investment?
Generating a good profit amount or a positive return on their startup investment is the guiding metric for every investor. An investor with a diverse portfolio will look out for profitable opportunities with a tech startup that wants to offer a solution to the existing problems of a large customer base. The success story of Airbnb in lodging proves the fact that investors can make a sizable profit. If an investor would have invested $2000 in that company in the year 2009, then they would have received more than $4 million as their ROI today. Maybe in another successful startup venture like Uber, the $4million would have become more than $6 million. One never knows which business next in line, that understands their customer in the competitive market and can provide a successful solution to a growing market opportunity may turn into a great success with their credible execution plan. This is why it may be a better option to invest in more than one tech startup if you think they fit the above criteria that promise a great ROI. Investors that have invested in other sectors and have gained the experience, can also choose to venture into different tech companies to prevent any potential risk and aggregate their income. This will surely minimize the risk of loss and help them benefit from this new approach. Those that are looking to not only increase their ROI but also take advantage of a tax break or deduction can choose to invest in a tech startup. There are some government bodies that are in favor of investors supporting the tech startups in their early stages, knowing their potential and influence on the overall economic growth. This is why the government officials allow the creditors to pay a lesser amount in taxes.
If you are now feeling motivated about tech investments and want to indulge further, then here’s a list of the next top upcoming technologies in 2021 that can act as a guide for you.