Why invest in tech
Firstly, some background on…
Global Mega Trends:
Technology continue to be the hottest sector for new businesses starting up worldwide, with the largest recent IPO’s and valuations all in tech. The rate of monetization in tech start-ups continues to accelerate:
- Apple took 7-8 years to reach $1 bn in sales
- Google/Amazon took 5-6 years
- Groupon took 3 years (and broke a world history in the process)
- Dropbox / Airbnb / Pinterest all broke that record again…
As a result, global VC investments into tech start-ups – particularly in web and mobile – continues to heat up. The following represents just a tip-of-the-iceberg summary of recent tech valuation success stories (all billion-dollar-plus companies):
- Uber, Airbnb, WhatsUp, SnapChat, Instagram, Tumblr, Occulus Rift, etc in US
- Alibaba, Baidu, Tencent, JD.com, XiaoMi, BaDouJiao, etc in China
- NDS, Waze, Viber, Trusteer, etc In Israel
- Atlassian, Xero, CampaignMonitor in A/NZ region
With overall economic uncertainties throughout most of the Western world, and record low interest rates, investors coming into Australia or even domestic investors looking to build up a diversified portfolio with a balance of risk vs. rewards, should find emerging tech companies representing one of the best asset categories for potential returns.
| Asset Class | Risk | Returns Potential | Job-Creation | Tax-free Profit |
| Cash / Bonds | Nil – Low | Low | No | No |
| Property funds | Low | Low | No | No |
| Non-tech companies | Med – High | Low-Med | Yes | No |
| Tech companies or funds | High* | Very High | Yes | Yes** |
(* High – but potentially can be lowered through portfolio risk-management techniques)
** If invested through ESVCLP or VCLP funds. ESVCLP or “Early-Stage Venture Capital Limited Partnership” are Australian Government-approved investment vehicles that affords tax-free treatment on ALL investment profits)