Over the past few years, a very crucial term has been added to the entire field related to business and entrepreneurship – ‘Startup.’ Startups have started springing in every nook and corner of the world thanks to the latest advance in science, technology and communication. In fact, some of these startups have become far more successful than bigger companies too! This is the reason why they have started having higher valuations as of now. This has especially benefited the tech startups which already have a high valuation. This also has a connection to the scaling of startups at some point of time.
There comes a time when the startup has reached a particular point where it is no longer considered as a new business. This is the exact time when one should start scaling their startup into something much larger. Now, scaling a startup is not an easy task. However, the ones who are well – equipped with its pros and cons will definitely know how to properly scale a startup. Now, after making this point clear, let’s come to the main topic – Why tech startups have high valuation?
Well, the answer is very simple here. So, the thing with bigger companies is that they require more infrastructures, finances, team members and many other factors with the gradual growth of their business. However, this is not the same with tech startups. Well, of course, they are in need of finances as they gradually expand or grow but they can let go of some other factors such as infrastructure and man power. So, in simple words, the costs which they have to incur hardly affect the revenue or benefits which they have generated over a certain course of time. We can take the example of WhatsApp here which was started in the year 2009. However, as we all know, it was later on bought by Facebook. Ever wonder what happened to its employees? Well, they were also bought by Facebook with a whopping amount which no non – tech startup or company would have ever thought about doing in a very short span of time.
This became possible because it was a deal done by a tech startup which had been scaled efficiently by its founders or team members so as to expand it or make its business grow further. Moreover, it did not cost them much money or take time in scaling the entire thing. It is not that the non – tech companies or startups have a low valuation. But, of course, when it comes to tech startups, the scenario is entirely different. Considering their fast and of course, cheap scalability, tech startups are considered of having a high valuation.