It wasn’t that long ago that being a tech start-up meant being showered with cash from any and all investment firms within a stone’s throw of your virtual reach.
Those golden days seem to be over, but it’s not all for the worst. Today’s tech start-ups might not immediately bathe in cash, but their owners are also learning valuable lessons about long-term business management.
Watching Their Gardens Grow
With the wild financial success of tech start-ups like Uber and Airbnb, venture capitalists had been overly eager for many, many years to invest millions of dollars into anything that sounded remotely like it could hit.
Now that the tech landscape is more or less established and it’s harder to create a tech start-up that will find an immediate and enormous following, investors have cooled to these once populous small companies. This is no surprise, as a lot of money has been invested in a lot of flops, and a lot of cash has been lost forever.
Today’s investors are approaching tech start-ups much more cautiously, much like they’d approach any new business. Instead of begging for a chance to throw money into the wind, they’re asking the right questions—about long-term profitability, return on investment and most importantly, how the start-up actually intends to accomplish any of this.
A New Landscape for Start-ups
Although the new landscape creates a bigger challenge for start-ups, it’s also forcing them to watch their little tech gardens grow instead of being handed millions upon millions of dollars more than they really need to get off the ground.
Start-up owners are looking at long-term models, they’re budgeting for things like marketing and staff more carefully; and instead of hoping for a fast cash grab, they’re digging in for the long haul.
Everyone’s eyes, both investors and start-up owners, are on the prize now. Profitability and long-term sustainable growth are the goals for tech companies, the fast smash-and-grab tactics of the past are falling away as more investors are realizing that road has led them to ruin. This year, expect valuations for start-ups to be lower across the board. Time shall tell!