As an investor, there are numerous reasons to invest in tech companies. Now that crowdfunding platforms such as ShareIn are highlighting the best opportunities out there, here are five of the most compelling reasons why every investor should seriously consider investing in tech.
1. Tech companies got cheaper to set up
In general, it’s never been quicker – and cheaper – to set up a technology company in comparison to other sectors of the economy. Look at the growth of the lean startup movement. So Tech companies offer the potential for good value for money.
2. Invest in tech for two reasons: scalability and the potential for big rewards
Companies based on technology lend themselves to being readily scalable and therefore have the capacity to grow at high speed with the potential for high returns. Combine this with the incredible tax breaks and it’s a very attractive proposition.
3. No longer have to join an angel network to hear about exciting new tech companies
It’s pretty obvious really – why not use the internet to seek out interesting investments? For many years, companies have been inefficiently producing business plans and making individual presentations to angel networks. Putting this information online so that it is easily indexable and searchable for investors enables decisions to be made quicker and from the comfort of your own home.
4. Diversification of your portfolio
For many, crowdfunding remains the new kid on the block. Some continue to view it with uncertainty, perhaps due to confusion about the different types of crowdfunding that are available, an issue that was pointed out by a recent report.
The most high profile fundraising on Kickstarter to date (at $10.2m) was for the Pebble Watch. Yet as the most well-known crowdfunding platform in the world, it has been keen to distance itself from technology as a sector. Remember, Kickstarter is a rewards-based platform which means that you don’t actually ‘invest’ (there is no financial return) it’s effectively putting in advance orders.
On an equity crowdfunding platform such as ShareIn, the concept is very different – you’re buying actual shares in that company in the hope that the business will grow and increase in value. There is evidence that early-stage investment can produce returns that are in excess of those you could expect from investing in listed equities in the FTSE. Of course, each individual investment will perform very differently and it’s worth reading that particular report in full but the point remains that an investor who is looking for the greatest returns should be looking at part of their portfolio being in early-stage companies.
5.Tech has a buzz – it’s exciting
It’s fun and interesting and how exciting to be in at the start of cutting-edge technology companies (and I honestly don’t think that’s just my Engineering degree talking!)
Here in Edinburgh,I can see really innovative tech businesses in the past couple of years – for example, with the development of TechCube, the Edinburgh Bioquarter, ECCI, the work being carried out by Informatics Ventures and the high-profile Turing Festival that takes place this weekend.
From companies to investors to customers who need existing problems solved in an innovative way, investing in tech through a crowdfunding site is a good thing!