The global landscape for early-stage investments is expanding as a new era in the tech venture capital dawns. Business transfer agents are increasingly able to source greater levels of corporate financing as investors have higher levels of faith in potential returns. In 2013, US venture capital firms raised $9.4 billion, an increase of 51% year-on-year, according DJX LP Source. Furthermore, some 151 early-stage firms closed funds, the highest level since 2002. On a global level, the number of early investments announced tripled in 2012 and 2013, according to the 2014 Preqin Private Equity Report. There are a number of factors behind this surge in the angel market.
Wholesale start-up costs are down
As global digital markets have evolved and fiscal and logistics services are being provided on the internationally competitive level, the cost of early-stage entrepreneurship has dropped significantly. It is far cheaper and efficient to begin a tech company than ever before, while it has become easier to reach large and expanding markets. This trend is being bolstered by the dematerialisation of product value, which is moving from physical to virtual goods and services. This in turn is decreasing transportation, storage and sales costs. Operational costs are also down on the back of greater adoption of price-sensitive services such as cloud computing and various efficiency-raising applications.
New analytics technology is allowing greater levels of insight
Innovation and advances in hardware and software allow start-ups to use newly available big data processes to perform complex tasks on a major scale. New standards and instruments, meanwhile, have opened up coding and deployment to more people, allowing them to use and de-bug software. More significance is also being placed on gathering consumer feedback, with a greater variety of tools to collect this input as well as platforms for public testing, such as beta tests and crowdsourcing. Essentially, there is a much larger audience of internet users that are tech-savvy and able to quickly rate and grade products. A young start-up can relatively quickly recognise its flaws and understand its position in the online marketplace. Investors in turn are able to analyse the prospects and potential value of a start-up quickly.
Global reach through social media and other platforms
The uptake of social media, blogging, crowdfunding and other services has expanded beyond developed markets, reaching a truly global stage. As a result, distribution to consumers has been improved through inexpensive communication, searchable information and real-time consumer choice. Selling to global consumers has become feasible for start-ups, who are benefiting from status-conscious and technology-demanding middle classes in emerging markets.
In short, there are more tech start-ups and a larger share of them being served by corporate financing boutiques that are able to deliver the firms to market, where investors hungry to benefit from a current tech boom have more belief in seeing returns.
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