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Venture capital is crucial to the technology sector as it allows companies to ramp up quickly in the early stages. For a number of companies where the intellectual property is not just an invention or hardware, but also around delivery and execution, you can scale-up much more quickly than your competitors if you’ve got a VC involved.
Raising finance early on can enable businesses to grow extremely rapidly – and it’s those businesses that are attractive to VCs as those are the businesses that will generate substantial returns. For an ambitious company, venture capital is a good early option.
However, not all companies are ‘investable’. Growth potential is fundamental. If that potential is limited then a VC wouldn’t invest, and that is particularly true in the technology sector.
One of the key appeals of the technology sector is that if you get it right you can often scale up very quickly, especially B2C companies, which can grow very rapidly if you have the right product.
VCs will look at the size of the opportunity and then think about how easy it would be for that company to deliver. The experience of the management team is critical to the company’s ‘investability’ – the existing team has to either have the talent now or have the potential to grow into it.
The biggest challenge that faces technology companies is making sure that the product, the team and the opportunity all work together. No matter how good the market opportunity, no matter how good the product, without the right people in the team a business is unlikely to be a success.
While people are key to growth it’s also a fact that it is a very exciting time to be involved in the technology sector. Combine decision-making processes with an inspirational team that can grow the investee company in record time, and you may well be on your way to securing that elusive multi-million pound exit.
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