The roles of entrepreneur and investor often closely intertwine – including digital icons like Reddit co-founder Alexis Ohanian, who has formed a solid partnership with Y Combinator, or Twitter CEO Jack Dorsey, who has invested in numerous other prolific platforms such as Instagram and Foursquare.
More so than in any other industry, the crossover between entrepreneur and investor is popular in technology – to the point where the intertwining of the two is almost inevitable.
Tech entrepreneurs are immersed in a game that is constantly evolving
Although tech presents a plethora of investment opportunities, not every one of them will be a smart move to make. Unlike other market sectors, tech is still metamorphosing with no real conceivable end. It means that changes are occurring all the time, and unless you are intricately involved in the industry yourself, it’s near impossible to keep on top of what’s up-and-coming and what’s going to be a flop.
Tech entrepreneurs generally know the trends in advance, and can sensibly forecast potential opportunities for growth and wealth.
In order to develop successful businesses, we have had to familiarise ourselves with every crevice of the industry and network our way to the top.
As a result, we have acquired a position where we can leverage other resources to build new tech startups, which naturally makes us ideal angel
We’ve learnt from our past experiences and know not to make the same mistake twice, thus we can offer sage advice and pool our investment capital into smart, profitable avenues.
Pillars for successful investment in technology
There are four elements that I look out for when an investment prospect presents itself:
The people driving the project are paramount to its success. Essentially, they provide you with a peek into the personality behind the brand – its dynamics, its direction, and its flow. Based on my own experience juggling several companies, I am well aware that the way a business operates is highly dependent on its team, its work ethos and its overall professional culture.
In my opinion, projects need to have a global reach in order to be worth investing in. Places like Asia, the UK and of course the US, are where the tech market thrives the most, while Australia still lingers significantly behind in this industry. Essentially, tech has paved the pathway for globalisation, therefore it only makes sense that businesses should want to ride this wave and carve out an international presence.
The business should have a solid revenue model. It’s really easy to find yourself tempted by the hype that comes with the buzz of a new startup, especially in an industry where every idea comes across as fresh and innovative, but smart investment requires evidence of tangible revenue. Ongoing profit is what ensures a business remains sustainable rather than dissolving into liquidation.
I prefer to invest in businesses that have no fixed assets. I see much more viability in platform-based businesses over traditional brick-and-mortar businesses – after all, there is no foreseeable stop to digitalism. At this rate, it is only going to continue to surge and find new ways to infiltrate our day-to-day lives.
Nick Bell is the founder and managing director of WME, an Australian based full-suite digital marketing agency with offices in Thailand, Singapore, New Zealand, United Arab Emirates and Hong Kong. He is also the co-founder of web design company Nothing But Web and mobile app development agency Appscore.