Many of the Technology investors are investing a lot of money in cloud start-ups hoping that they will also turn out to as a huge success like Zoom or Snowflake. A number of start-ups have valued hundreds of times of their revenues.
Zoom and Snowflake are video conferencing and data analysis companies who worked really well in the market and their shares risen by 464 percent and 176 percent. The venture capitalists are looking for more of such companies.
A lot of software-as-a-service (SaaS) companies are getting a good amount of funding from investors though they are generating very low revenues. Its just a hope that one day tables will turn and it will be another billion-dollar start-up.
One thing that they do not want to understand is that things does not work that way. If one company succeeded in market, that does not mean that other companies engaged in the same business will also succeed.
In coming decades some of these companies will be values at $250 million – $300 million with a revenue of just a single million. It really does not make sense to invest in such companies in a hope that one day they will give back. Rather they can invest that money elsewhere where the money will do some good.
There are companies and idea which can grow in the market but are not because they do not have enough money and then there are companies which are not going anywhere but have tons of money invested.
Dear readers, do you think that investing in those so-called great start-ups will give them a good return or should they invest in some other small companies with the good potential?
Let us know and stay tuned for more!