Sometimes it seems as though all startups are tech companies. When they are in early stages, we talk about “technology risk”, even if that means figuring out how to outsource your supply chain and get your product manufactured overseas by someone else. It’s not really “technology”, especially if the item is something that is being sewn or otherwise assembled by hand. We talk about technology risk in the sense that every company has to figure out how to make and deliver whatever product or service it sells.
In the original Greek root “techne” is about making stuff. It refers to craft or art, so it makes sense that every company has to make something, even if what it makes is Intellectual Property or a service that can’t necessarily be held in your hand.
Another reason people seem to think that every company is a tech company these days is that you pretty much can’t start a company without using a lot of technology to do it. Regardless of whether you have programmers setting up an e-commerce site or creating a SaaS application, you’re likely to be using technology in setting up and running your company. Those companies that don’t use technology probably won’t have the ability to scale and grow big in the way that Angel and VC investors are going to demand. Since Rockies Venture Club only deals with companies that can scale and provide a significant return to our investors, we don’t see a lot of non-tech companies.
Some people have argued that no companies are really tech companies any more. Everyone uses technology to create and deliver their product or service, so it’s no longer informative to distinguish some companies as tech companies and others as non-tech. The real company behind the technology may be providing banking or financial services, wayfinding on your iPhone, tracking your workouts and fitness levels, providing entertainment through games or graphics and so on. Even though your company may be a SaaS (software as a service) tech company, ultimately it’s probably providing a non-tech service to someone.
A lot of the companies we look at are healthcare tech companies. These companies are either dealing in healthcare IT where they are providing some kind of information or communications system to make healthcare delivery more efficient, or they have some new technology to deliver drugs, dispose of toxic waste, or other healthcare related operations. Are these “tech companies” in the same way that IBM is? Probably not, yet we still call them tech companies.
Ok, so are ALL venture class startup companies tech companies or are NONE of them tech companies? When it comes down to venture capital and how decisions are made, the fact that a company is a tech company or not really doesn’t matter. VCs have expertise in highly specific areas, so if you have an IT data storage company (tech company) that will be of interest to certain types of investors whereas if you have an e-commerce company, that may appeal to others. Within the realm of “tech companies” e-commerce used to be big prior to 2001 and now it constitutes just about 4% of VC investment. SaaS and other tech fields have eclipsed this number and comprise the bulk of VC investment these days. So my conclusion is that it doesn’t much matter any more whether you have a”tech” company or not, it matters what you do and who is interested in investing in that.
To learn more about technology investing, staffing and education in Colorado and around the country, consider attending Rocky Venture Club’s “Investing in Tech Companies” event coming up next Tuesday, July 9th in Denver. http://rockiesventureclub.wildapricot.org/Default.aspx?pageId=1349467&eventId=698722&EventViewMode=EventDetails