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Why do many VCs tend to invest in tech startups?


Venture capital funds (see Venture Capital) are looking for investments that can generate substantial returns on invested capital in a relatively (as compared to traditional industries) short period of time. Tech startups have unique characteristics that make them a good match for venture capitalists. Broadly speaking, tech startups often require small amounts of capital to start, are relatively capital efficient to scale, can grow quickly by leveraging technology, and can develop barriers to entry for competitors that allow for the building of a valuable enterprise.

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