15 Dec A Technology Port In A Market Storm
Headlines in 2015 have been particularly worrisome for global investors. Front pages talking about “The Great Fall of China” and a “Wild Week for World Markets” have seen stocks and share investors around the world make a dash for the door.
Yet while we see listed businesses facing a whiplash effect from China, Greece and the Middle East, the news headlines about high-growth technology businesses seemingly couldn’t be more positive. From record-breaking funding rounds in the U.K. and the U.S. and the blossoming U.K. fintech market or the growth of European unicorn businesses — earlier-stage tech ventures appear to be partially protected from the wider market storm.
Take the news earlier this year that Lakestar, investors behind Spotify, Skype and Facebook, has raised a new €350 million fund, aimed specifically at the European market. All, it appears, is live and kicking in the technology market.
The bottom line is that at times of market instability, entrepreneurial ventures and ecosystems thrive — for a variety of reasons.
Moving To Safer Ground
Market disruption causes widespread worry. As we saw in 2008, there is little safe haven from such uncertainty. Yet there are investment opportunities that retain some independence from the market rollercoaster, in unlisted ventures (as of today, the fastest growing of which are largely technology or technology-enabled high-growth businesses).
It is unsurprising, then, to see investors — both institutional and individual — increasingly seeking alternative investment opportunities, such as early-stage businesses. Businesses founded in recent years also benefit from the highly accessible technology that has flooded consumers and businesses alike in recent years, which has greatly reduced the price of building and scaling a business.
There are elements of the technology ecosystem that actually benefit from some instability.
This, combined with a lack of easy capital in the years immediately following 2008, means these businesses tend to be leaner — run from co-working spaces, constantly iterating their business model in order to better deliver to their customers, with a laser-focus on growth — and may be seen as better investments than traditional, large companies, which can be known — fairly or not — to be less agile in turbulent times.