Venture Capital in the Tech Industry

Technology is the collection of various techniques, tools, machines, processes, and skills utilized in the development of new products or services or in accomplishing aims, like scientific experimentation. Technological change can be viewed as a set of phenomena whose source can be neither science nor human effort. Technological change is also called the ‘technological Revolution’ (van de living & Moltke, 1963). The main effect of technological change on society has been the increased efficiency by which many tasks are performed. Technological change has had positive results in almost all areas of life, but there are also aspects of the technological changes that have had a negative effect on society.


Venture capitalists typically look for two attributes in potential technologies: profitability and marketability. A venture capital-backed tech-enabled product could meet both the profitability and marketability requirements of a venture capital investor. Venture capitalists typically look for venture capital firms that deal only in tech-enabled companies, which generally refers to those with technological systems that have a reasonable chance of earning cash.

Another example of an investment in a tech-enabled good is the funding of research and development activities of biotechnology and genetically modified crops. Venture capitalists fund these types of technology companies because they have a good chance of commercializing new genetically modified food products that can be legally sold across the world. In addition to food products, tech companies investing in this sector also fund the study of other technically modernized industries, like the computer industry, cellular communications, energy production, aerospace, and semiconductor companies. These industries generally face one of two challenges when trying to profit from their technology: competition from other technically technologically based goods and companies, or not having enough information to compete with other technologically based goods and companies. Venture capitalists usually do not look at these examples of industry characteristics when financing the venture capital for these types of industries.