- July 15, 2019
The technology domain is highly dynamic with new advancements coming to the forefront each day. Many investors, with an aim to drive sustainable returns on investments and to diversify their portfolios, invest in technology startups, often without being completely aware of what they are getting into. A large number of startups rise and fall everyday, which is why investors must be completely sure when putting their money in technology investment projects. Continuing on the subject, in this blog post, we discuss the things you should check before going ahead with a technology startup investment opportunity. Read on.
1. Consumer Behaviour Understanding
Business marketing strategies are developed according to target customers. Each person has a different pattern of consumption and disposition towards a particular product. Knowing how the targeted population will react towards a product would definitely help in designing, pricing and promoting it. The investor should, therefore, know whether the startup has the required level of understanding of consumer behaviour and the need their product would be solving.
2. Strong Database
Every modern business generates a large volume of data, most of which is unorganised, and therefore, useless for the business, unless it is processed in a useful format. To gain insights from large volumes of data, businesses must have a strong database management system in place, which not only stores the data in a secure environment, but also provides the ability to visualize data and extract actionable information. Investors, therefore, must check whether the technology startup they are planning to invest in has a cutting-edge database management system.
3. Business Model
The business model, in simple words, is how your business makes money. Business models of different startups are different in many ways, and its selection depends upon the nature of services and products offered by the business. Investors should check the financial projections included in the business models and annual reports of technology startups, to get an idea of the profit they are expected to make in the future. In addition, check what measures would be taken and how the business would recover in case of losses.
4. Domain Expertise
This is the main factor that helps the startup founders to establish a trust and understanding with the investors. Having relevant experience or information regarding the domain in which the product would be competing is essential, as it helps with the market research and customer acquisition. In fact, many problem areas and pitfalls can be avoided with the right domain knowledge. Investors should, therefore, check the experience and capabilities of the team that would be working behind the idea and whether they have relevant industry knowledge.
Though there is no dearth of technology investment projects, you must proceed with caution as there can be colossal differences in the profitability of different avenues. That is why it is always advisable to partner with an experienced investment firm such as Fig Tree Capital Ventures. Our highly experienced investment consultants are always ready to assist you with direct investment solutions that promise great potential returns and significant tax benefits. To learn more about the most profitable technology startup investments in the US, fill out our contact form or simply call (866) 300-2170.