The goal of every startup is to grow beyond its founder. Getting there, however, requires not only a good idea and elaborate business plan but most importantly- funding! In fact money becomes one issue that companies face as they try their best with developing new products or services for customers who want them while also covering up costs associated in running operations at any given time including rent space where offices can be set up portable furnishings appliances etcetera .
In 2022, there are literally hundreds of thousands of companies worldwide that are still looking for investors. Some of them will get the funding, which will take their business to a whole new level. Others might not do as well even after getting the trust of investors. If you’re looking to invest in a startup, how can you be sure that your investment isn’t going to go to waste?
Is There Risk in Investing in Startups in 2022?
Unlike big companies like Microsoft or Apple, which seem too big to fail, investing in startups comes with a degree of risk for venture capitalists. However, every venture capital firm needs to keep in mind that even Apple and Microsoft started out as startups.
The risk might be high but the rewards can also be huge. If you want to play it safe, buying stakes in established companies is the route to follow. The trouble is that the return you’re going to make isn’t going to be big. In fact, according to Forbes, most investors see a return on investment (ROI) of 7% as a great success. With startups, the ROI can be much, much higher.
To ensure good profits in the long run, investors need to choose carefully where they invest their money. It’s not just about the company, although the way it’s run is also an important factor. It’s also about the company’s niche.
“Fintech, mobile, and video technology are the three most promising industries to invest in,” said David Kezerashvili, co-founder and managing partner of InfinityVC, when interviewed for the article Why Startup Investing Is Here To Stay by Companionlink. Based on a number of factors in the current climate, he might be spot on.
FinTech
Financial technology or FinTech for short is an umbrella term referring to the tech (both physical and virtual) created with the intention of improving traditional forms of finance. The main advantage of FinTech is that it has no limits, nor will it have in the future. The explanation behind this is simple – everyone in the world uses money in one or another, therefore, everyone is a potential client for FinTech startups.
Making things easier both for businesses and consumers is the main goal of FinTech, as well as what’s going to keep this industry relevant for years to come. Some examples of FinTech startups that have turned into world-beaters include PayPal, Wealthfront (automated investment service), Lending Club (peer-to-peer lending platform), Riskified (fraud prevention software), and so on.
Online Shopping
Digital commerce has been around since the early days of the internet, but it went through a huge change in the early 2020s. When the COVID-19 pandemic hit in 2020, people from all around the world were asked to stay at home. As a result, showing for essential items like food and medications became a problem for a large portion of the population. The solution came in the form of eCommerce.
During the pandemic, eCommerce blossomed, and when COVID-19 started losing the battle, people still didn’t give up on shopping online. In fact, just the opposite happened.
The number of companies that do eCommerce keeps increasing in 2022. Only a few years ago, everything was done across major platforms like Amazon, while in 2022, there will be literally thousands of eCommerce startups.
Mobile Technology
It’s estimated that there are 6.6 billion mobile users in the world. That accounts for about 83% of the total world population. The best thing is that this number keeps on increasing. According to research, the usage of mobile devices increases at a constant rate of 5% per year.
Not only is the number of mobile users increasing but the technology is getting more and more advanced. Just a few years ago, feature phones were the standard. In 2022, it’s the smartphone.
With billions of smartphones out there, it’s no surprise that the need for smartphone apps is huge. And it’s going to get even bigger in the near future. Therefore, investing in smartphone startups doesn’t seem like a bad idea. Further, investing in the tech that keeps those apps going also looks like the right way to go.