Wave technology startups are causing significant attention , especially from investors always looking for opportunities . Notably, many technology startups of Vietnam has attracted capital from individuals as well as foreign venture funds . Whether investors should pay attention to these factors when considering whether to join the field is considered ” trendy ” this ?
1. Difficult to apply traditional valuation models:
The majority of investment funds and securities firms use the enhanced version of the discounted cash flow method of Freedom ( Discounted Free Cash Flow ) to value Enterprises of want to buy . This method is based on assumptions about future cash flows .
However , doing so is difficult to apply for start-up technology companies usually due to less depreciation and always have to invest long-term development . Also for this reason that the method based on profitability reference like P / E , EBITDA is also difficult to use .
In addition, the valuation methods based on fixed assets is not feasible for many tech companies are no real estate or machinery . Their main asset is brainpower .
Therefore , the valuation of technology startups need regulations on the performance indicators ( KPIs ) specific to each model , such as the number of users , the average value per user or access index . This KPI is compared with the market value of companies in the same industry , which estimates the value of the company .
2 . There must be a long -term investment perspective :
The traditional investor can choose long-term strategy or just “surfing”. However, the intention of short-term investments in technology companies in Vietnam will be difficult due to the particular sector.
The high-tech models need a lot of money to invest in research and development to produce the original product. When the product was commercially successful, fixed costs will be hold back and increase variable costs also not as fast as the increase in revenue. Profit company’s breakthrough technology will come from there. And by the original characteristics such costs, investors in technology requires determination and patience altitude.
Their patience paid off by the investment company can dominate the market. The majority of successful technology products will achieve this by relying less geographical barriers. For example, consumers in rural or mountainous areas can also access online services through learning 3G connection.
One other important factor affecting investor’s perspective is liquidity. Other than the time of the internet bubble in the late 20th century, the technology companies in the current wave is being held in investment funds (private equity). So the “surf” takes a lot of transaction costs.
3. Invest both technology ecosystem :
In fact, the technology used is not singular experience, which is a process of many stages. For example, to facilitate buyers online, offsite sales, companies also must facilitate online payments, preparing the logistics to deliver on time, to invest in online marketing services to re-stimulate demand for shopping … From there arose a series of issues need to invest in e-commerce such as electronic payment, logistics, advertising or information management system customer.
The same is happening with many online business models other. So, investors are interested in the technology sector also need to calculate or call the investing for both ecosystems. Only then, the ability to raise new success.
4. Learn to cooperate with the engineers :
The founders of technology companies mostly computer engineers, programmers with ideas to help solve the existing problems in life. Engineers can nighters for programming commands, talking reason rather than use public relations techniques.
So for technology investment, investors will have to work with people very different from entrepreneurs in traditional sectors such as retail and real estate.
The world is to receive a wave of new technologies and Vietnam is no exception. The winner can grasp the entire market, but long-term investment needs, serious and comprehensive. So should invest in technology or not? In my opinion, “jump on the risks do not know who will win, but do not jump into it surely regretted will finally have a winner.”