The development of the world of information technology in various parts of the world is currently experiencing rapid growth, especially in the field of startup. The large number of investments and acquisitions by big companies in startup firms in technology reflects the invasion in this field is very promising. Perhaps you are wondering, what makes investors flock to invest in startup companies? Are these startup companies profitable for investors? Let’s review it completely.
What is a Startup?
According to a source of information from Wikipedia.org, startup is a startup company, commonly called startup (or other start-up spelling), referring to all recently operating companies.
These companies are mostly newly established companies and are in a phase of development and research to find the right markets. The term “startup” became popular internationally during the dot-com bubble, during which many dot-com companies were established simultaneously.
Although the meaning in general startup is a new company pioneered, but in its development the meaning of startup narrowed its meaning and more familiar aimed at digital technology company.
Startup business grew in the late 90s to 2000, in fact many startup terms. From various sources obtained, the characteristics of startup companies are:
- The company’s age is less than 3 years
- The number of employees is less than 20 people
- Revenue is less than $ 100,000 / year
- Still in progress
- Generally operating in technology
- Products made in the form of applications in digital form
- Usually operate through the website
- Most of these business startup characteristics and the perpetrators are more inclined to move in the field of technology, websites and things that blend internet.
Investment in Startup Company
Investing in a startup company is considered a high risk high return investment, since startup mostly takes a long time to make a profit. Investments made at startup companies usually use investment schemes in the form of equity participation with compensation in the form of stock ownership in related startup companies. With this scheme, the investor gets the main advantage through capital gain in the form of a startup value increase from time to time so that when startup or stock at startup is sold, the selling price can far exceed the initial investment value of the investor, so that the investor can earn multiple benefits. In addition, if the startup has printed the operating profit, then the profit will be distributed in the form of dividends to its shareholders, including to investors as shareholders on the startup.
These multi-fold benefits make investors who are already in the digital business getting bolder and more enthusiastic about investing in startup companies. technological developments with a wide reach and the number of large companies to invest and finance startup companies to make the local creative industries in various countries berbondong bondong startup company.
The above conditions may raise the question, why people from the upper middle class who have more funds to invest yet have not invested much in startup? Most likely the above facts occur due to lack of information and education on this new type of investment.
The advantages of investing in a Startup Company
- Creativity can play a big role in starting and running the business.
- No formulas or rules have been set to follow; far fewer restrictions than franchising or buying business opportunities.
- The owner is in control of all aspects of the business, including location and what the operation is to look like.
- Employers can draw from previous work experience, skills, and passion in building a business.
Disadvantages of investing in Startup Company
- Business Start-ups are usually more expensive and risky because there is no proven formula.
- In order to get capital to fund the business, a detailed long business plan must be put together.
- All details of starting a business, including licensing, marketing, naming businesses, searching for product sources, etc. are the responsibility of the owner
Before entering the Startup business world and investing in it. You are required to dig more information and references from those who first plunge in this field. attending seminars and discussion forums will also help you further understand this investment. the world of technology investment in the field of startup can be an option and an alternative in managing funds and invest your money.