Risky or Worth It? Vikas Datt Shares Insights On Why Early Stage Technology Investments Are Most Lucrative At This Time
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Innovation and disruption have become the 21st century's watchwords as technology startups continue to revolutionize how people do business. From Silicon Valley to New York City, the startup landscape is full of ambitious entrepreneurs hoping to disrupt entire industries with groundbreaking ideas.
The amount of venture capital flowing into tech startups is staggering. According to the recent report of EY (Ernest and Young), as of October 2022, the information technology sector has $8.9 billion venture capital investment, only second to the highest sector of health and life sciences with $9.1 billion. They also reported 2022 as the second-highest investment year on record already, expecting a total investment to hit the $200 billion mark for the second year in a row. These massive fundings allows startups to develop solutions for problems that have long plagued various industries, from health, to information security, to transportation, and education.
Vikas Datt of CerraCap Ventures, an early-stage technology venture capital firm, understands that this upward trend enables startups to pursue bold, ambitious projects and finance the development of cutting-edge technologies. His company invests in early-stage B2B companies globally, focusing on the new fundamentals of the digital age. With his extensive experience of investing in technology, he shares why it's a great time to invest in early-stage tech companies.
Technology creates long term value
The technology industry is constantly evolving and growing, and there is always a need for new and innovative solutions. As a result, there is a constant stream of new startups and early stage technology companies entering the market, all looking for funding to bring their ideas to fruition. This creates a wealth of opportunities for investors to get in on the ground floor of potentially disruptive and lucrative technologies.
Potential for high returns
These investments have high potential for returns: Early stage technology companies have the potential to scale very quickly on marginal costs, which can result in significant returns for investors. Typical SAAS businesses operate at 80-85% gross margin. If you can scale the business across multiple geographies it has potential to bring in significant value. In fact, studies have shown that early stage technology investments have historically had higher returns than investments in more mature companies.
Market volatility is irrelevant in the face of long term trends
Due to the current environment and stock market volatility investors are slowing deployment of money in early stage businesses. This has leading to a scenario, where even great companies are finding it difficult to raise money. As an investor you can get good valuations and good terms for investment in early stage companies at this time. As the investment horizon is long term, say 5 to 8 years, the current market is a great opportunity to increase allocation in Venture Capital.
Potential to have a positive impact
Investing in early stage technology companies not only has the potential to be financially lucrative, but it can also have a positive impact on society. Many early stage technology companies are working on solutions to some of the world's biggest problems, such as climate change, healthcare, and education.
CerraCap Ventures' ability to see a business' potential
CerraCap Ventures invests in cyber security, healthcare, and enterprise software companies.
Venture investments are seen as High Risk High Reward. However with the correct strategy, diligent selection and active management of the portfolio, this risk can be well managed.
Using CerraCap Ventures' highly-effective "Sales-and-Scale" model, the venture capital firm can clearly determine what startup companies are worthy of taking a risk and guiding them through their industrialized process, creating win-win outcomes.
"Our process in CerraCap Ventures is unlike any other venture capital industry. We support our portfolio in areas of Sales, Marketing, Talent and Technology, resulting in lower risk and higher success rates" Vikas Datt shares.
Investing in tech startups can be a lucrative yet risky undertaking, but Vikas Datt and CerraCap Ventures believe in their expertise to scale early-stage companies. In return, these businesses maximize their potential, leading to tremendous value creation.
