It is estimated that the UK’s technology industry is growing more than 2.5 times quicker than the wider economy. London is now ranked as the second most important place for tech companies and only Silicon Valley in the US is better connected. It is little wonder then that the sector attracts lots of attention from speculators and here we take a look at some of the considerations for those looking to invest in a tech business.
What to Look for?
With so many tech startups out there, you could be forgiven for being a little bewildered when wondering where to begin looking for an investment opportunity. There are, however, some simple tips that may help kick start your search.
It is often the case that successful tech companies are those who seek to find solutions to problems or challenges. WeTransfer, for example, found an effective way of helping people to move large quantities of data. A smart technological solution to a relatively simple problem, but one that millions of people faced on a daily basis.
So looking for companies who are trying to find solutions to the right kind of problems may help your search for an investment.
Who to Look for?
The smartest and brightest people are the short answer, but how do you ascertain who they are? One option is to research the backgrounds of the people involved in the companies you are thinking of investing in. Those who are highly qualified or have excellent experience can often make for the best bet – it also helps to talk to them.
But there are other considerations. A good return on investment isn’t always just about capital, there may be other benefits, ethical satisfaction for example.
Where to Look?
To begin with, it is advisable that you familiarise yourself with the sector and so a great deal of reading, watching and listening is paramount and may in itself lead to opportunities.
Other areas to investigate include following platforms that bring together investors and companies – crowdfunding and angel funding websites are commonplace and offer a great insight into what is happening in the sector.
In addition, making contact with individuals in the industry may give you insights that aren’t as easily available online or in print. Using LinkedIn and attending industry events are two sure-fire methods that many investors use.
There are also a number of legal considerations to think about when investing in a tech business. The tech industry is built around intellectual property (IP) and so issues surrounding patents and the protection of IP are important.
Cyber insurance is also important in order to protect your investment and when taking out cover, look to one of the major players to avoid insurance fraud and to get the best service.
With cyber insurance there are two levels of cover, the first protects companies and individuals from online liabilities and other risks. The second protects potential actions taken by customers and clients.
The tech industry is no longer burgeoning, it’s booming and so there is an abundance of opportunities for investment and profit.