New tech startups have been established at a rather high pace in recent years. Many individuals are stepping up to become entrepreneurs and create new technology companies, enhancing the invention of new products and services in the market. This is not only happening in tech hubs such as Silicon Valley but is gradually growing in other cities and across different countries.
But why is this happening? One factor contributing to this is growth in the advancement of technology itself, which usually leads to the introduction of new technologies now and then. Thus, depending on the advances, there come new opportunities in the market for new products and services to be developed by entrepreneurs.
Here are the other major factors contributing to the rise in tech startups. Keep reading.
Minimal Entry Capital
In the past, starting a tech company required significant upfront investments in hardware equipment, software, and other necessities. However, the current generation is lucky to be provided with all these through public platforms and at lower prices, making starting a tech venture with minimal capital investment affordable. Some examples of platform services include cloud computing, whereby a company can host its data on the Internet instead of purchasing costly servers. Google Cloud is another example of a scalable solution that can accommodate the growth of a startup. They only charge the company based on usage.
The same applies to open-source software, which simplifies the processes of developing and implementing new products for developers without beginning from scratch. This cuts the costs of actualizing a business idea and increases the number of tech startups.
Access to Wider Markets
One major benefit of Internet services is that startups can have access to markets all over the world from the moment they begin. A new company with fewer employees and limited capital resources can successfully sell its products or services to consumers in various regions without establishing branches in those regions. That is an added advantage for starters, as it allows them to expand their markets and get more customers.
The use of social media tools, sales tools, online supermarkets, and email marketing helps startups advertise and sell their products to countless consumers. For instance, a new tech company may opt to use an email finder with built-in email verification to source leads and reach out to more potential targets using a clean and deliverable email list that will enable them to build a reputation. This means it has become easier for new start-ups in technology to tap into the global market and compete with bigger firms.
Leverage on Mobile Technology
The dependence on traditional computers for accessing the Internet and creating content has slowed down. However, new opportunities have been opened for tech startups through the use of smartphones and portable devices. There is a high demand for Apps that can solve problems, entertain, or simplify users’ lives. To take advantage of this market, startups are creating apps targeting specialized industries or that have features not offered by the big players.
In the same way, mobile technology has increased customer accessibility to startups in emerging markets where web access may not be available. By creating apps or services that most suit mobile users, startups can penetrate these ever-expanding markets and gain more customers.
Supportive Environment
Across different cities and countries, there has been a conscious effort to foster ecosystems for startups. These ecosystems include incubators, accelerators, co-working spaces, and networking events through which early-stage entrepreneurs gain the requisite tools, guidance, and access.
Tech startups have also been getting support from governments as they realize the importance of such companies. Subsidized government funding, tax credits, and innovation funds allow many young companies to finance their projects.
There is also a trend for corporations to invest in startups through innovation labs, accelerators, or equity investments, which offer funding, mentorship, and client connections to startups. These investments have also facilitated access to capital, which has reduced entry costs; hence, more people are venturing into startups in the technology sector.
Additionally, colleges are now encouraging students to engage in business by teaching them how to start a business and also how to manage challenges such as business competitions.
Easy Access to Funding
Venture capital is one of the primary ingredients of any successful startup. Hence, the availability of cash has been a major factor in the creation and growth of technology-based startups.
Nowadays, Venture Capital firms and Angel Investors are starting to focus on investing in startups focused on the technology industry. These investors provide funds that many new firms require to expand their operations, develop new products, and launch them into the market. That has greatly contributed to the formation and sustained growth of tech startups.
Moreover, there are now more ways for startups to get funded through crowdfunding sites. Crowdfunding, specifically through platforms such as Kickstarter and Indiegogo, enables startups to source funding directly from consumers interested in their products. This form of funding has also helped more start-ups find funding to kick-start their business ventures.