The venture capital firms provide high risk capital to the organizations with the chance of getting back high return on the investment. In the recent times, new software and effective usage of internet are capturing the traditional industries in a fast pace. From real estate industry to the transportation industry, disruptive technology has been used everywhere. The disruptive technology tends to play a vital role in the improvement of the quality of life, previous business models of the company and the global economics (Boccardi et al., 2014). However, the technological advancements are only accepted within the organization, if it has an adequate contribution in the value chain of the company. The venture capital firm has considered taking up the disruptive technology in their firm as the managing partner is concerned with the effect of the disruptive technology on the future jobs and the work procedure. Therefore she would like to conduct an analysis of the implementation and the effect of the disruptive technology. This report will analyze and evaluate the impact of the disruptive technology in the venture capital firm in the Australian context. This report will also discuss the effects that the Australian venture capital firm Accretion Investment Management and Global Venture Capital had after using the disruptive technology.
Background of the Industry
The venture capital model generally works for the investors. These firms help the organizations by providing theme funding and allow the startup companies to pursue their vision. These companies also reduce the number of the organizations which fail in the business as they focus more on the technological improvements and the potential of the ideas, than strengthening the teams of the organization (Kraft, 2015). The venture capital firms also help in increasing the profit percentages as they maximize the highest profit return for the lowest money investment. By specializing in the disruptive technologies, the venture capital firms can focus on the special and customized needs of the dynamic kinds of the companies. However, this specialization needs to be more profound, so that the venture capital firms can focus on the industries that are developing rapidly (Brummer, 2015). For this reason, the companies need to have an in-depth knowledge on the usage of the disruptive technology. The scholars define the disruptive technology as the emerging technology that still lack some refinements, but it alters the previous structures of the firm in a drastic way. These technologies have the capability to alter the previous life styles in the business, work places and in the international economy.
Use of the Disruptive Technology
Technological advancements are moving in a rapid pace. There are two kinds of recent innovation in the technological field, sustaining and disruptive. The sustaining technologies are the technologies that have been innovated successfully from time to time. However, the disruptive technologies are the newly developed technologies which add more value to the existing technology, therefore have the capability of changing the current technologies drastically and maximize the economic output (Fan & Suh, 2014). The usage of disruptive technology may take longer time for the development than the current technological pattern, but it has the potential to achieve a rapid penetration into the system. Therefore the present technology can be replaced leaving a strong impact on the system. The disruptive technological innovations improve the established services and the products in such a way that the market could ever imagine or expect, but it is mostly recognized by the consumers in the market easily. The disruptive technology has the potential to change the complicated and expensive product in a cheap and simpler one. Therefore the product can be more accessible in the market which increases the profit of the company. The disruptive technology also makes the products and services more affordable and open for a large number of populations. Generally when the innovative measures taken by the new companies are considered to be the unattractive one by the established organization, but the disruptive technology ensures bringing the innovation in the market. Therefore, most of the scholars recommend the organizations to consider the disruptive innovations which may influence the value chain of the organization (Hallen, Katila & Rosenberger, 2014). Therefore the company can plan the future steps after figuring out whether this technology can be used in their business or not. Especially for the venture capital firms, the usage of disruptive technology is very much useful to capture the market trend.
Advantages and Disadvantages of Disruptive technology
Before implementing the disruptive technology in the joint venture firm, the company should analyze and evaluate the characteristics and the advantages, disadvantages of the technology. Where the disruptive technology is a cheaper one while implementing ad procuring, it comes with greater risks at the same time. It is a simpler technology that can be used by most of the companies without any intensive training session (Christensen, 2013). It is a convenient technological tool and forces a major change within the company. However, it is unpredictable and comes along with greater risks. The implementation of the disruptive technology also does not propose a huge profit for the organizations; rather it adds value to the lower margins. The advantages and the disadvantages of the implementation of disruptive technology are as follows:
- This technology adds new and innovative capability in a short period of development.
- It can provide immediate profitability if it is used in the appropriate situation (Rolfes, 2016).
- Implementation of disruptive technology reduces the cost.
- It also allows the company to have a rapid entry into the market.
- It provides a developmental opportunity to the organizations if they identify the offered opportunities.
- The primary disadvantage of the disruptive technology is that the established production procedure needs to accept and adopt the technology or else the production will be hampered (Rolfes, 2016).
- The consumers of the venture capital firm may resist the new technology, therefore the organizations using this technology has a possibility of experiencing failure.
- Implementing this technology may demand to an innovative marketing strategy (Rolfes, 2016).
- It constitutes treats to most of the organizations.
- It is quite difficult for the organization to quantify the effective commercialization of the disruptive technologies.
Effect of Disruptive Technology
Venture capital firms generally deal with the finance corporations that provide financial help to the small start-up companies and the small businesses that should have long term growth in the business industry (Lerner, Leamon & Hardymon, 2012). These capital firms engage in fundraising and communicating with the general and limited partners of the company. The venture capital firms need to invest a big amount of money on the start-up companies or businesses and they have to ensure that there will be return on the investments they have put in. These venture capital firms have the responsibility of providing proper capital money. In order to keep the desired connections with the companies it is undeniable that the use of technology is absolutely necessary. The use of technology has to be very reliable and be able to connect all the investors and the clients through a same network. The communication between both the sides has to be very effective and swift in this fast-paced world.
The growing monopoly of the disruptive technology has taken over the modern world. Disruptive technology has many units and it has a grave impact on the finance sector as well (Manyika et al., 2013).The effect of the disruptive technologies has the power to change the scenario of the world. In the finance sector, the most effective implications disruptive technologies can do is on the use of Internet of Things (IOT) and the use of Biometrics (Miorandi et al., 2012). The venture capital firms have to deal with various kinds of clients regularly. It is impossible to communicate through them over phone or other such communicative aspects. It will be favorable for them to use internet technologies to communicate with more clients over a short span of time. The use of biometrics has also gained popularity in the recent times because it is the process of registering one’s biological traits through machines so that they can be very easily identified (Campisi, 2013). As these firms deal with big sums of money, it is very important to assure safety to the clients and the companies themselves. The use of biometrics would help them to prevent fake transactions. The use of social media is also very important because these firms can attract their clients through social media and therefore, they can spread their business ideals (Aral, Dellarocas & Godes, 2013). Thus, the venture capital firms can be benefitted from using disruptive technologies. The chosen companies Accretion Investment Management from Australia and the global company Global Venture Capital have recorded very positive impacts by using the disruptive technologies. The implications of these technologies have helped them to secure their data and safety. They have also drawn more public attention than they used to draw previously. This would help them to grow and raise their popularity among the people.
Recommendation and Conclusion
It can be recommended from the above discussion that the effects of disruptive technologies will be very positive on the venture capital firms. It will be much beneficial for the venture firms if they implement disruptive technologies. The use of social media, internet and biometrics would be very helpful for them. The firms can get effective feedbacks from their clients on social media that will be effective for their goodwill and reputation. The use of internet in the firms will help them to communicate with their partners and clients in a short time. This will lead to a better competitive market and effective things in the market. The use of biometric technology will be a huge asset for the venture capital firms. There are always chances of fake transactions and cheating. The introduction of biometrics will register the biological traits of human beings such as fingerprints, eye ball and some others. The companies have implemented the things and they should recommend other companies to use it so that it can gain a global appeal. These are authentic traits of human beings so no one will be able to cheat and make fake transactions. In case if it is done, they will be arrested immediately by the police. They can be traced very easily. This will surely help the venture capital firms throughout.
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