Investment by Fund and by Tech: Which is better?

JAN 07,2023
Trung Tran

Today's generation simply does not have the patience for a brilliant concept and a strong determination to achieve. If you're an entrepreneur hoping to expand and scale, you might want to consider finding capital for your new business. But is that always the best case? Have you ever heard of or considered Investment by TECHNOLOGY?


What is an Investment Fund?

An investment fund is a type of financial vehicle (sometimes referred to as a "collective investment scheme" or "CIS") that pools money provided by a number of people to invest in derivatives, fixed-income securities, stocks, and other types of financial instruments.


According to surveys, one of the most frequent causes of small enterprises failing is a lack of funding. On the other hand,  funding allowed Apple, Google, and Amazon—all of which began as little startups—to expand into global corporations.


What benefits do investments bring us? People now have access to markets that they might not otherwise be able to invest in on their own. They also aid with investment diversification. They entrust investment managers with the savings of investors and instruct them to scour the market for the most lucrative business prospects.


Why do Startups need an Investment Fund?

The main benefit will be to raise capital for the startup. Second, they help with a startup's business plan. Thirdly, because they are profit-driven, they will make sure that money is invested properly. In other words, they encourage you to manage the money wisely because it's their money that's on the line. Fourthly, they aim for long-term gains and work to build the company's reputation in the market, which would ultimately draw in additional investors and boost capital inflow. They support the emerging startup as an evangelist. 


Finally, they aid in maximizing profits while minimizing losses and damages (essentially risk management), creating surplus and income for the socioeconomic development of a nation. However, as mentioned earlier, investment funding is not always sure to be the best case. 


Investment by Technology

In lieu of financial funding, startups can reach out investors to obtain other types of investment, in which the investor supports startups with technology issues. 


You must have heard of the term “Outsourcing”, especially in the IT industry. After the Great Recession, when many nations were forced to outsource teams in order to save costs and maintain business continuity, outsourcing started to become popular. In the world of business, outsourcing is the practice of using a third party to perform tasks, run operations, or provide services on the company's behalf. Jobs in data entry, journalism, marketing, accounting, human resources, and technology—the field most closely associated with the keyword—are frequently outsourced.


Instead of giving a large amount of money, many investors fully or partly provide their technical resources to startups to specifically support them in terms of technical problems. In return, the investor or the company behind it usually either becomes their technical partner or tech cofounder, as they hold a certain amount of shares depending on their discussion and agreement.


Should Startups Consider Investment by Technology?

First, as entrepreneurs, they have brilliant ideas of how to develop their desired business, however, they themself might not have enough abilities and knowledge to cover all aspects of a business. For instance, technology must be one of their top priorities if (s)he lacks IT experience. Rather than outsourcing IT resources on their own, they might rely on an investor providing technical support. 


When doing so, startups have all access to the investor's resources, the staffs and the technology. In the near future, Meliholding orients to function as a Fund providing technical resources, in which Meliplatform is used as the tool to execute your business. Meliplatform, valued at about $3 million, can assist you with simple code bases, developer workflows that are optimized, and junior developers that can produce just as good of code as more senior ones.


In other situations, spending money has never been simple because the expense could spiral out of control. Because everything is transparent, you can trust an investor to provide technical help without worrying about additional budgets or staffing needs.


However, there are drawbacks to this approach as well. Startups may need to seek out additional financial investors to fund other areas of the firm, such as marketing, operation, R&D, HR, etc., as the resource received is limited to technology issues.



Both methods of investment, by Fund and by Tech, are beneficial to startups under different circumstances. Regardless of your choice, careful consideration is a must in terms of financial estimation, strategic planning, labour resources, company capitalization, etc.


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