Tech startup: Definition & the differences between high tech and tech enabled startups

Tech startup is a company whose purpose is to provide technology products or services to market. There are two types of tech startup which are high tech and tech enabled startups. Understanding startup’s actual type is essential for you is to plan for your strengths. In this post, we discuss the key differences between high tech and tech enabled startups and how each of them innovate and offers value to customers in their own field. Let’s begin.

What are tech startups?

Tech startup

A tech startup is a business whose purpose is to provide technology products or services to user. These startups bring new technology products or services or provide existing technology products in new ways to the market. Tech startup deliver absolutely new products or service to the market by way of either:

  • Push: when the business uses a new invention to generate a new market. It’s from this that the idea that the user doesn’t know what they need until they have it appears. For example, Sony Walkman is regarded as a push technology whereas the later Apple iPod isn’t the same notion.
  • Pull: when the economy or an industry arises an issue to be solved and technology generate the solution. For example, Apple’s iPod applies since the portable player already existed and with the rise of MP3s, the market revealed a solution to handle it with a new technology.

Differences between high tech and tech enabled startups

1. What is high tech startups?

Tech startup

In the past, high-tech was as businesses that built something out of nothing. In other words, they released a state-of-the-art technology that was new to investors and made users awe in delight. However, nowadays, the meaning of high-tech has changed. No longer is the term high-tech pasted on business that belong to Silicon Valley. But it’s now referred to as any companies that combines technology in its business model. For example, a marketing agency that uses SEO-related software, UI-UX design apps, or other site auditing tools such as Screaming Frog. You are using digital technology to perform your goals. Great, you’re a tech company!

Pros and Cons of a High Tech Startup

As you can imagine, high tech startups that bases on cutting edge technology can be a lot of fun. These startups are usually going to make the biggest headlines when they succeed, but they’ll also be the most financially draining failures when they fall.

Pros:

  • Gain large multiples (10x-100x) when they successfully exit
  • Great work environment surrounded by smart, ambitious people
  • Having ability to make history

Cons:

  • High technical risk (eg: it might not be possible to develop)
  • High market risk (eg: even if it can be created, will anyone buy it?)
  • Need a lot of investment capital to fund pre-launch runway
  • Limited, highly competitive limited human resources

2. What is the Tech-Enabled Startups?

Tech startup

A tech-enabled startup is one that provide new or innovative user-experiences using existing technologies to the market. The Internet has created to revolutionizing efficiency. If something can be done in seconds instead of minutes or hours and if tech can help to achieve that, then it should be. This is the way that tech enable products and service come to life. For example: Online portals of banks, virtual education from colleges, and telemedicine are all products and service of tech-enabled startup. They integrate a variety of technologies to bring their real-life services to their users on the Internet. To support services via technology is to cut queues, make education asynchronous, and improve the reach of good healthcare. If you are thinking of building a technology-enabled startup, you might want to focus on customer service or brand experience.

Indicators of a Tech-Enabled Startup

Here are some elements that might indicate a tech-enabled startup.

  • Mainly using off-the-shelf and open-source software
  • Have less than a year to go to market
  • Have mores sales and marketing staff than technologists
  • Using tech to boost margins in an existing market
  • Faster time to gain the revenue, profitability
  • Likely to be obscured by larger companies if they can’t develop fast enough

Pros and Cons of a Tech-Enabled Startup

Pros:

  • More likely to find product or services which fit with market
  • Shorter time for marketing
  • Require less expensive to start
  • Come with a low technical risk

Cons:

  • Have more difficulty to maintain a competitive edge (fewer patents, proprietary tech)
  • Have higher platform risk when using licensed or public technology
  • Less likely to have a large multiple at exit

Which type of tech startup is better?

Startups can succeed as either “high tech” or “tech enabled” businesses, but in common, investors favor the former. Therefore, many business try to spin themselves into that camp. We say “spin” since most companies are really tech-enabled startup with a thin veneer of “machine learning” or “blockchain” tech layered on to enhance their appeal to investors.

If you have decided to start a tech startup you will need to be aware of the associated risks, costs, and advantages. The key advantage is that tech startups and spin-off can raise VC capital easier because they are more suitable with the Home-run model. The biggest problems for a technology startup is that time to market tends to be longer.

If you want to become a technological startup you need to understand human resources are your most valuable factor. You will need to hire a team of top engineers and developers and bring them the freedom to discover and innovate. If you are not a technical person, you will need to partner with a person or company that can ensure you are hiring the right people.

As a tech-enabled startup, you will be able to achieve cash faster and with a better return on investment. However, the disadvantage of a tech-enabled startup is that barriers of entry are lower and you will need to stand out in competitors with either an amazing companies, efficient client acquisition and retention or cost-efficient engineering. Determine what you want to do, and act accordingly. As an entrepreneur or business the most crucial element is to get a product and a corporate vision.

Wrapping up

To sum up, this article brings you a comprehensive and detailed overview of main aspects of the high tech and tech enabled startups. Hopefully it provides a better sense of the types of tech startups out there and how they grow.  

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