“Tech” refers to a wide array of processes, materials, machines, and concepts that have changed the way we do business in one way or another. Technological change is not something that happens overnight. It is often a gradual evolution from earlier forms of technology. Technological change is sometimes referred to as “change through the Ages.” The basic principles of economic theory call for the expansion of technological systems through new and more sophisticated procedures and techniques as human activities and preferences change over time.
Venture capitalists fund many of these ventures. The venture capital firms serve as the middleman for the tech companies in negotiations with suppliers and manufacturers, funding them through a variety of means. Venture capitalists are eager to provide seed money for new ventures they believe have the potential for growth. As a result, it is not uncommon for a startup to seek and obtain seed capital from venture capitalists prior to going public.
There are several trends that make up the characteristics of good venture capitalists. A high proportion of venture capitalists funds start-up companies; they tend to be more focused on solving the problem of a unique company versus large companies that seek to expand into new markets. Most venture capitalists also prefer to back highly disruptive tech companies. They prefer companies whose business model is built around an innovative idea or a product that is capable of changing the face of a business or the world. In addition, tech companies that rely on long term technologies tend to require larger seed funds than those that are more short term oriented. Finally, the successful founders of tech companies tend to come from disciplines outside of business.
In contrast, less than 3% of venture capitalists fund tech-enabled businesses. This represents a significant departure from the past trend. In the past, venture capitalists made their money by creating a portfolio of portfolio investments. They invested in companies that they felt had the potential to be successful, but not necessarily in ones that were on the verge of becoming dominant players in their industries. Venture capitalists today typically look for growth or future profitability as a key factor in selecting a startup to back. Therefore, if you want to become a venture capitalist, you’ll need to be willing to take a look at both the strengths and weaknesses of a startup.
A key indicator of a successful venture in which the founder is retained is the fact that there are significant financial rewards. Many tech companies fail to receive significant compensation when they go public. Therefore, if you’re interested in becoming a venture capitalist, you must be willing to be prepared to look at both the strengths and weaknesses of a potential tech startup prior to putting money in it.
Selling Technology: As noted above, there are two fundamental differences between a tech company and a technology company. For most venture capitalists, selling technology is more difficult because they don’t have a deep understanding of the field. Therefore, they have to make certain that the company has a clear plan in place for how it will make money. For instance, if the company plans to make money by selling patents, the potential investor should ensure that the patent does not expire. In addition to this, they should be skeptical of a startup that plans to make large sums of money by selling its patents without developing the product to match its competitors.