Although the IT sector has tremendous opportunities for investors, it would be a challenge for a successful businessperson from another industry to invest in the IT company directly. Intangible IT world is very different from what people used to in other sectors. Some of the risks are:
- Lack of the necessary expertise to evaluate the idea
- Absence of tangible business actives (usually the only business active is the “brains” of the founders)
- Lack of knowledge of the specifics of IT company’s life cycle
- Lack of connections in the industry
These and other factors make direct investment in the IT startup a risky journey. It is where VC or business incubator can be a safe alternative. Participating in VC or business incubator is a logical move for the investors willing to try the IT business.