One of the most alluring qualities of tech start-ups is their unknown factor. Essentially novel – and often the harbingers of dramatic shifts – is it even possible to speak of a more formalized tech start-up arena? It seems a valid statement to speak of greater predictability in the behavior of tech start-ups, if not their content and ethos. The generation that began IT has receded, indicating the passing of the baton and the maturing of IT business as we know it.
Indeed, 30 years ago, “tech” was essentially Windows or Apple, floppy discs or paper filing, and Computers In The City would have been just that – a store selling Pentium boxes as a premium PC. There are always paper-thin wannabes in any business fraternity, and the IT industry has had more than its fair share. There is a greater maturity in venture capital nowadays, however. Investors have found their feet in the arena, after decades of sometimes spectacular potential becoming real, unfortunately alongside innumerable alarming failures.
Tech Start-ups Get SEC Approval
The business world has been forever changed by Microsoft. Not even the erstwhile tobacco, lumber or steel barons could have imagined such massive wealth and dominion as that possible with an IT venture. Bill Gate’s success literally changed life on the planet, and very often that tinsel twinkle is expected of every new tech start-up coming to market.
There was much alarm among global regulators around the Bitcoin run during 2017 and 2018. Legislators have long sought to restrain tech adventures and take the risky or unknown factors out of their funding. Moreover, the alarming number of costly tech failures pointed to an unusual pressure on tech start-ups to deliver massive dividends, whether that was a genuine potential or not.
The American Securities Exchange Commission (SEC) is leading the way in a new regulation that means good news for tech start-ups. The all-new Long-Term Stock Exchange, based in Silicon Valley, has emerged as a common sense avenue for tech start-ups to both come to and stay in the market. Geared for what traditional business might consider a normal flow of things, the exchange will enable tech start-ups to position themselves with funding, while also not succumbing to poor quality delivery under mercenary pressure from investors.
Some of the logical structures in place on the new exchange include greater voting power as a reward for longer-term investors, far greater transparency around milestones, as well as executive bonuses. The latter, in fact, are capped on the new exchange. If listed on the LTE, companies are still able to list elsewhere. Assuming enough interest – and there is already a queue – the exchange might very well become the default option for tech start-ups going to market. With a successful balance of funding and dividend timelines, it’s hoped that the LTE will present as the best of all worlds for new tech companies and investors alike.
More Difficult Start-up Realities
On the flip side, other persistent realities of the arena are far harder to tackle. Massive, extremely cash-flush, and often somewhat paranoid, the presence of the giant tech overlords are a daunting reality for many tech start-ups. Data masters supreme, the big tech companies have become almost psychic in their pursuit of potential competition, no matter how small. In fact, ‘start-up-small’ is a size that often catches their eye.
Constantly combing through data for a hint of value – and competition – in tech start-ups, tech giants frequently gobble up potential future competitors. It’s not only the legacy of the tech giants’ success that puts pressure on start-ups to produce unsustainable results, blunt road-blocking comes directly from the giants themselves. For the consumer, there might be little difference, as this kind of quashing of start-up novelty is most usually manifest as a buy-out. For the overall tech space, however, the continued concentration of ownership makes for a highly challenging – if not unhealthy – arena in which to launch.
Through the eyes of many economic models, this dominion or at least ability to consume competition before it sees the light of day is anathema to a healthy business. Bodies like the SEC have a limited mandate and legislative backing to thwart this phenomenon, American anti-trust laws not withstanding.
Persistent Start-up Anomalies
Researchers typically point to certain metrics in a business sector or market environment to depict a growth stage. In other words, signs of maturity are very often analogous – if not identical – when looking at people, business sectors, or democratic nations, for example. One persistent sticky reality tugs at the tech start-up space, and that’s the dearth of women involved. Were it a snapshot of a society or traditional corporation, this would be seen as a very skewed metric.
It is a skewed metric and, for a host of reasons yet hard to accurately define, women remain chronically under-represented in tech start-ups. Currently still more of an anomaly than a point of protest, it does present against the backdrop of centuries of women being seen as second-class citizens in business.
Perhaps less patriarchy than the simple truth of schoolgirls being less beguiled by tinkering with geek stuff, the patriarchal stigma is still hard to dust off. The numbers don’t lie. A very small percentage of start-ups come to market with women on the executive. According to research conducted by Longhash, four of every five tech start-ups have no female representation. Whether it’s still possible to then talk of a maturing tech start-up arena is debatable, as this seems such a fundamentally skewed reality.
Future tech start-ups would do well to extrapolate their genius into more confidence, the kind that translates as resistance to unrealistic investor pressure. In that future, this will at least be supported by emerging platforms like the new SEC-endorsed LTE. Coupled with that, more persistent tech start-ups will need to be able to withstand the huge temptation of selling out to the tech monster brigade. And a future with a large spike in purposeful female recruiting and participation would also help stave off the inevitable critique that is surely due, in a fraternity with such lopsided gender realities.