The Startup Revolution: Why Are Tech Startups Worth So Much?

It's no secret that startups have blossomed into a massive US industry. Private businesses, usually confined to small market values, have exploded in value, and now there are dozens of private tech startups topping $1bn in value, nicknamed unicorns by the observers. The trend is only expected to rise through 2018.

With the global industry now worth hundreds of billions, funding levels have matched it, hitting around ⅙ of the business value through 2017 and we're even seeing startups fund startups! Where is this money coming from, where is it going and why?

Conventional Lending

Classic financiers had been left by the wayside of the tech revolution. However, several countries globally have liberalized financial legislation to allow companies to catch up, meaning many of these businesses are synergizing with the latest fintech, if not funding it.

The other aspect to this is the specific management of these startup companies. Typically, big businesses go public and are floated, benefiting from management schemes geared towards public/stock ownership. However, with so many tech startup unicorns now about, financial advisors have had to adapt. AAA Credit Guide (https://www.crediful.com/personal-capital-review/) suggests managing these funds in much the same way as you would a personal account. Other companies are offering enhanced, bespoke management programs.

Crowdfunding

Available to everyone end of the scale where funding is concerned, kickstarters give developers the opportunity to raise cash on the fly and establish a greater level of engagement with their consumers. What's more, it's become a flagship for gender equity, with Kickstarter, one of the crowdfunding vanguard, reporting that 61% of senior leadership positions were dominated by women in their company.

Big Institution Involvement

As the boom of tech startups has grown and grown, it was inevitable there would be a "bust" - though not in the classic sense. Third quarter 2017 has seen a 49% drop in startup investment, but this still accounts for $272m. Muscling their way into the market are the big institutions and banks, who have sunk their money into diversifying and updating their wealth creation and management portfolios and developing futuristic robot bankers.

Worldwide Appeal

Whilst the tech startup business is well established and booming in the USA and Europe, it's also started to gather a worldwide appeal. Tech startups are inherently accessible, with much of the software open source and only basic computer technology needed for testing. Whilst you can go as high-tech as you like, some of the most ingenious and valuable innovations seen have been from basic backgrounds. Investors and advocacy organizations have invested hundreds of millions of dollars on influencing tech startups in Africa, hoping to harness the potential of those huge populations by teaching valuable business management skills.

So there you have it. Even with a percentage drop in cash flow, tech startups continue to bloom and blossom into the powerful, trendsetting companies they are today. Whilst no trend lasts forever, you can still bet that they'll be around for quite some time more and turn yet more heads in the old-world money institutions.