IT Challenges and Opportunities for VC & Private Equity Firms 

iuvoTechnologies_helps_VCs_scale_faster

The technology sector is home to some of the most successful businesses in the world. Many of these have been examples of the immense success that fast-growing, innovative firms backed by venture capital can achieve. As the tech sector has matured, it’s also become a target for private equity investments.

However, the story of venture capital investments in tech is not always a perfect one, and many new risks, threats and challenges need to be met. Fortunately, with the right IT and consulting solutions, VC firms can reduce risk and plan for the success of their portfolios.

Contact Us

Venture Capital and Private Equity Challenges 

Both venture capital and private equity can benefit substantially from making investments in the technology sector but there are some major obstacles that can challenge technology equity investments including inefficiency and corporate espionage. Without proper solutions, these businesses will fail.

Challenges Faced by Venture Capital Firms

These are some of the main obstacles to success faced by venture capitals:

According to the Bureau of Labor Statistics, around 20% of businesses fail in their first year and around 50% fail by the end of five years. This is often due to insufficient capital, inadequate revenue, operational inefficiency or some combination. Helping businesses build a foundation that can allow them to mature can help to remove this risk and minimize resource waste.
Technical debt is the implied cost of a future rework(s) to code or another technical product due to choosing easy or wrong solutions today. This is common in startups due to hiring generalists rather than expert specialists. For example, many venture-backed businesses have little to no IT experts, meaning they are building out processes on an insufficient infrastructure.
Many startup teams are using less-than-ideal IT solutions. This may be due to dated in-house knowledge, lack of expertise or other reasons. However, it can cause low productivity, especially as the business scales with venture investment.
Ransomware is growing increasingly common and has caused huge problems for venture capital tech. Similarly, corporate espionage, business disruptions, and tech failure can cause major downtime. Many VC-backed companies do not have the systems in place to be ready for these eventualities.
8

Major Risks for Private Equity Firms

Private equity firms are also facing a variety of risks in the technology sector. Inadequate cybersecurity at acquired businesses can turn a solid investment into a source of trouble rapidly. Some PE firms considered attacks to be almost inevitable, but this view is short-sighted.

2
Many startup teams are using less-than-ideal IT solutions. This may be due to dated in-house knowledge, lack of expertise or other reasons. However, it can cause low productivity, especially as the business scales with venture investment.

Relying on the wrong private equity IT services and other third-party solutions can lead to unnecessary risk. Choosing an experienced financial IT services provider is essential. This can also empower PE companies to better manage their risks and prepare for the worst.

Technology Challenges in the Investment World

There are many technological challenges that impact venture capital investments. Any firm that is thinking about making investments in the tech sector should be aware that cybersecurity and data handling need to be top priorities. The following can be the difference between a thriving new venture and a struggling one:

  • Maintaining data consistency
  • Quality
  • Availability and integration into business practices

Similarly, companies, especially startups, need to be aware of the technology changes around them. The introduction of artificial intelligence, the blockchain, and various new entrants into the sector can have seismic impacts. If ventures lack technical expertise, they may struggle to adapt.

Get Venture Capital Whitepaper

Cloud Opportunities for Venture Capital and Private Equity Businesses

Of course, it isn’t all bad news in the technology sector. In fact, the significant venture capital opportunities are exactly why so many investors are interested in tech. For example, a cloud investment in financial IT services could pay off in a big way. Surveys indicate that of financial services companies, roughly:

The cloud is growing increasingly important as firms adopt more complex multi-cloud and hybrid-cloud infrastructures.
Technology can also be an answer for accelerating the growth of startup investments. VC backed businesses can invest in their IT solutions to: 
  • Increase productivity
  • Scale smoother
  • Mitigate risks
With the right technical expertise, they could be on the fast track to growth and an exit. Furthermore, improving IT solutions early can help to eliminate cost centers and reduce technical debt, avoiding potentially harmful future impacts.  can avoid large initial capital expenditures and instead “rent” hardware space and other services in small increments, scaling up as demand grows, giving them the flexi-
3

bility and agility they need to thrive. Early experiences with venture capital helped mold iuvo Technologies’ founding. With the right venture capital IT solutions, we have been able to empower businesses in the Greater Boston Area to achieve their full potential.

Venture Capital Firms Invest in Rapidly Growing Companies 

Numerous technology venture capital firms have identified the benefits of fast-scaling companies in cloud, technology, and other rapidly growing sectors. Some active venture capital firms focused on tech include:  

  • Sequoia Capital
  • The SaaStr Fund
  • Andreessen Horowitz
  • Point Nine
  • Costanoa Ventures
  • New Enterprise Associates
  • Kleiner Perkins

Kleiner Perkins has achieved 240 exits with a total of 1,136 investments (a relatively strong rate for VC), allowing the firm to expand into sectors beyond technology. Similarly, some top technology private equity firms have achieved great success in this area, primarily in more mature tech companies.

VCS and Private Equity WebPage (5)

Cloud Solutions for Venture Capital-Backed Businesses

The right cloud solutions can help technology private equity and venture capital investments to thrive. Cloud computing provides the cybersecurity, data availability, and computing power that VC and tech PE firms need to ensure the success of their investments. Increasingly, financial firms rely on data and analytics to achieve success. Without the right venture capital and private equity IT-support, those businesses can’t hit their goals. Conversely, developing the right cloud solutions can help increase and accelerate ROI, improve scalability, reduce costs and optimize infrastructure, among other benefits.

Get Venture Capital One-Pager

iuvo is a Leading IT Support Services Partner for Venture Capital & Private Equity Firms

The iuvo Technologies team began our story working with VC-backed businesses. We have continued on our track record of success by helping to make IT simple for financial firms. Our team consults with both financial firms and the companies they invest in to provide recommendations that can address IT problems, enhance productivity, and help leaders achieve strategic goals.

Our solutions provide cost-efficiency by eliminating the need for our clients to stay on top of and invest in every new technology. We handle the learning and implementation for you. uvo Technologies has worked with more than two dozen venture-backed businesses. 

7-2

Of those, 35% had successful exits already (compared to a 10% industry average) and another 35% are still actively growing. Our clients significantly outperform general venture capital and private equity industry statistics thanks to our experience and innovation solutions.

Frequently Asked Questions

Efficient technology and disruption-proof IT solutions can reduce risk and increase returns. By partnering with an IT consulting company, venture capital and private equity firms can boost the success of the businesses they invest in.

Yes, many popular cloud solutions are designed with industry-leading security practices. However, every business must configure and protect its infrastructure correctly to ensure security. Thus, working with cloud consultants is a smart move for VC firms.

Some examples of private equity investments in technology and cybersecurity include Insight Venture Partners, JMI Equity, Thoma Bravo, Paladin Capital Group, and Summit Partners. However, there are many others interested in this space.

AWS ROI can be measured by the cost optimization it achieves with the just-in-time availability of computing resources. It can also be measured by the reduced risk of downtime. Increased productivity from DevOps best practices is another form of ROI.

Typically, a cloud migration can be measured by duration, direct costs, and disruption of work. After the migration is complete, productivity, cost containment, and technical KPIs can be used to measure the returns.

Testimonial-Bg.jpg

Contact iuvo Technologies Today To Empower Your Investment Success

Venture capital and private equity investments in technology have the potential to achieve major returns. Though these returns can be lucrative, the rapidly evolving nature of the technology sector means that there are some special challenges that can get in the way of realizing tech opportunities.

iuvo Technologies provide industry-leading venture capital and private equity IT solutions. We help investment firms minimize their risks and maximize their upside. Explore our catalog of IT Services today. Then, contact us to learn more about how our unique blend of people-centric technology solutions can empower your success.

Contact Us