WHY IS IT SO HARD TO GET A TECH STARTUP INVESTOR?

Many technology entrepreneurs are frustrated by the difficulty of obtaining start-up capital in today’s economy. No matter how terrific the idea for a mobile app or web application, it’s often incredibly difficult to convince an angel investor, venture capital firm, or startup investors to make a gamble on great ideas.

The problem the next generation of tech CEO’s face arises from the uncertainties inherent in technology markets.

First, technology trends have proven extremely difficult to predict for traditional investment companies. In the late 1990s, many firms still thought the Internet might just be a fading fad. The bursting of the tech bubble in 2001 confirmed suspicions for many, and many cutting edge products have suffered as a result. Few people anticipated the success of mobile gaming, and even fewer anticipated the explosive growth of social networking. The inability to predict new trends makes investors nervous, and that makes startup capital hard to find.

Second, many traditional venture capital firms lack the technical expertise to know if a new idea is viable or prohibitively expensive. An angel investor probably has a good understanding of basic economic principles, but probably doesn’t know anything about coding or web infrastructure. Without a high level of computer literacy, it’s very difficult to gain a thorough understanding of a product’s likely costs and potential market growth. Uncertainty about costs and likely payoffs discourages many investors from getting involved with technology companies.

Third, technology patents are a nightmare for investors lacking legal expertise. Major tech companies now hold thousands of patents and sometimes bury startup firms in litigation. Many great applications have vanished into bankruptcy as a result of mounting legal fees. Investors need to have confidence in their ability to avoid patent lawsuits in order to invest. Otherwise, legal expenses could quickly dwarf profit potential, making a promising tech company a bad investment.

With all these obstacles, its difficult to see how even the most promising mobile app could get off the ground. Fortunately, new cutting edge interactive agencies offer tech entrepreneurs new hope. These new agencies often specialize in startup technology companies with web applications. Since their business models rely on picking out great ideas for promising web applications, they have the programming and legal expertise to identify and quantify risks. They can make better investment decisions, and that means they are much more likely to invest in a risky idea than traditional firms. Starting a new tech business is still tough, but these new agencies are making it a little more manageable for the economy’s most promising innovators.

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