Technology investment: the smart avenue to success
Technology investment: the smart avenue to success
Join the DZone community and get the full member experience.Join For Free
Regarding tech industry stock projections for 2015, there are some clear, already-existing success stories out there that offer good grounds for how and where to invest in the next 12 months.
Take the tech firms feeding the up-and-coming Internet of Things (IoT): yes, there’s plenty of hype about the projected expansion of this technology, despite the fact that most informed commentators can tell you we’re at least a decade away from peak adoption. However, it’s generating a great deal of interest from an inveterately hard-nosed investment industry – and that’s because the groundwork for that future mass adoption is already being laid.
Golden opportunities for investors already exist in IoT industries focusing on smart home goods such as connected refrigerators and TVs, wearable devices and IoT infrastructure. An example of the latter is Jasper Wireless, which has successfully raised $148m since its launch in 2005 from investors and VCs like Sequoia Capital, Benchmark Capital and AllianceBernstein. Hard-boiled investors know a golden opportunity when they see one: Jasper’s technology happens to be ingeniously scalable, allowing it to expand at sonic boom speeds when necessary, and it already works with 2,500+ firms globally.
The much-talked-about “app economy” is also worthy of considered attention. Chunks of software that can be downloaded onto mobile devices, apps can integrate with your gadgets’ features such as the camera and GPS. A good restaurant app, for example, will tell you as soon as you step outside where you can get the food you like best within 500 meters, and what offers are available.
Billions of apps are downloaded every year. Even a simple app is stingingly expensive to develop (around $32,000) and takes two months on average to create. A complex app could take six months to create and will typically leave you with little to no change out of $163,200 (at least). It’ll be even more expensive to develop if you want to run it on more than one operating system (i.e., Android and iOS).
It may be that investments in app development are about to give way to firms specializing in optimizing websites for the mobile web. Google (on which most online business depends) recently launched a new algorithm that enhances a site’s search engine rankings according to how “mobile friendly” it is – how easy it is to view and navigate using a mobile device.
The sheer diversity of tech initiatives out there for investors can be perplexing, to say the least. One potentially promising means of maximizing gains and avoiding pitfalls comes in the form of tech incubators: investment and mentoring programs that help promising new startups develop and gain traction.
Here’s an example: a 29-year-old Estonian, Kristjan Hiiemaa, bootstrapped a business software startup called Erply in February 2009. Then he and his collaborators approached a London-based mentoring and investment program by the name of Seedcamp, which was so impressed by their idea they selected them for their startup-mentoring Seedcamp Week the following September. They performed so brilliantly at the normally nerve-shredding Demo Day at Seedcamp Week that their investment term sheets leapt from three unsolicited offers from tier-one Silicon Valley VC firms to 20 in the space of five days.
Incubators (or accelerators, as they’re sometimes called) can help investors spot a winner. However, take care: they’re proliferating and they’re not all of the same quality. Some novice incubators are misguidedly nurturing frankly second-rate tech businesses with little chance of enduring success.If you’re relying on tech incubators as a guide to investment, you need to ask some probing questions about the provenance and quality of their mentor base and their track record. If you’re not persuaded, steer clear.
Keeping up to date with how specific technologies, trends and companies are faring is essential if you are ever going to build a successful portfolio in this fast moving sector. Regular reading of online articles from experts is a great way to keep your finger on the pulse of market movements, and investment articles such as those written by Todd Bliman for TheStreet should be your first stop. Writing on topics as diverse as why investors should be skeptical about the policies of the European Central Bank, Portugal’s remarkable turnaround from the Eurozone’s fastest sinking lead balloon to one of its most resiliently rebounding economies, and why investors needed to be calmly skeptical about the sharp rate rises in China’s banks during the summer of 2013, Bliman brings a cool-head and rigorous insight to all matters financial.
The tech industry has risen, phoenix-like, from the ashes that nearly nuked it in the global economic meltdown of 2008/9. It’s now an arena of bold innovation and phenomenal growth, provided you can sort the wheat from the chaff. The Internet of Things offers plenty of safe investment opportunities, as does mobile web development. However, it may be wise to draw on the expertise of tried-and-tested tech incubator companies and online investment news sources to ensure you are making informed decisions.
Opinions expressed by DZone contributors are their own.