There’s a lot of talk online about a drop in investment in the tech scene.
We chatted to our CEO, Jeb Buckler about his opinion on it.
Is there a drop in investment in the tech area?
I wouldn’t say that there is a lack of investment, I would say that the focus of the investments; the market that those startups is in, has changed from the perspective of the investor. They’re looking at different markets post-COVID than they were before and it’s an adjustment period.
How badly are tech start-ups being affected?
I think some are and some aren’t really. Some startups are doing exceptionally well because of what’s going on in the world. I think we get fluctuations, don’t we? It’s like a little bit of a roller coaster as opposed to a straight line curve. It’s not an exponential curve. It’s a curve that goes up and down and up and down. During covid, even Beauhurst added a filter for COVID risk, which was kind of red, yellow, green. So, they were able to filter out startups in the UK that were benefiting out of COVID. There’s always going to be world events that will influence your market and your product fit. As a business owner you need to adapt and it’s those specific entrepreneurs who can demonstrate their ability to do this, they will receive more investment.
How could this affect the UK tech entrepreneur sector, and technology innovation in general?
The same criteria for investment exists everywhere and in any market. So an investor will put money into a company that’s got evidence and proof that they’ve got a market to go live to. But that market and the focus will change depending upon what’s going on in the world, however, the investor has still got money that they need to invest.
Investors are always looking for a home because inflation is going up and if they’ve got money sitting in their account, then they’re losing money.
Are you concerned by the rise in inflation?
If you’re looking at food and petrol and everything else, there is an inflation index which includes things like televisions from China. So televisions from China are getting cheaper and cheaper, yet commodities such as tomatoes and petrol are getting much more expensive. So if you look at the current inflation rate that’s published by the government, it seems quite low to 3%. Yet actually, in real terms you don’t go and buy television every week, but you put petrol in your car every week and you buy tomatoes every week with all of those commodities going up through the roof the real inflation is actually very, very high. So investors are always looking for hope. That’s why during covid, money was still being invested.
Is it time for innovators and entrepreneurs to panic? Why/why not?
If you think that COVID is going to continue, or monkeypox is going to continue, or some other bad situation is going to continue, then yes you should panic if you’re in a market that relies upon people being face-to-face or distributing your goods. Or if you’re in manufacturing and people just can’t afford your device because it’s a luxury product rather than a necessity.
However please note that this is no different to any other time where we would expect the founder of a startup and indeed any business, to constantly evaluate the risk that your market is going to disappear based on world events. If you’re an investor you’re going to look and make the same kind of judgment, and only choose to put your money into something else that you consider more proven than anything else. It comes back to the Founder needing evidence – proof that their concept works and there is a strong demand for it to grow in the UK before getting investment.