Booming tech sector creates new investment opportunities

Wednesday, January 19, 2011 | Posted by: Fiona Cullinan
Categories: Financing , Technology sector | Tags: entrepreneurs, capital gains tax, technology, CGT, video, financing, internet, mobile, deal, startups, storage, scale

Technology is getting exciting again. Oscar Jazdowski, UK Head of Origination for Silicon Valley Bank, reviews the sector that is becoming both essential to and pervasive in modern life.

I don’t think there’s been a more exciting time in technology financing. The costs of starting a technology company today are lower than ever before. Never in history have you been able to access a marketplace of five hundred million people. So, in some respects, the internet democratises start-ups.

The big question is: can you scale up? It’s all well and good to take a business to £3 million, but can you take it to £30 million? Scalability is what turns a deal on. What turns a deal off is a ‘me-too’ product that can’t differentiate itself in today’s crowded market. But good ideas and good business models find capital. Good ideas win out at the end of the day.

We’re currently living through a mobile and a video revolution. We will look back at this period as the moment when a computer became a mobile device. A lot of money is going into location-based services. For example, a retailer will know where you are and will be able to send you a coupon though your phone with a discount voucher at your nearby branch.

The other thing that’s constant is storage. With the video revolution that’s taking place there’s a lot of data being created, and it all needs to be stored. Storage is one of those things in the technology that will always have to be invented and reinvented.

Many of the entrepreneurs that I’ve worked with haven’t been overly concerned about capital gains tax. An investor may consider it more, but entrepreneurs are investing for big wins – at the end of the day they expect to make so much money that it doesn’t really alter their thinking.

People should absolutely be investing in this sector. Technology has become one of the fundamental building blocks of the UK economy. Technology is not going away because it’s pervasive, it’s part of our everyday life.

Image: © Andreas Brandmaier

The information provided in this article originally appeared in Elevate magazine, which is available as a free download. It has been prepared as a topical guide only. It is not a substitute for full professional advice, and specialist assistance should be sought in relation to any particular circumstances. Talk to your local Grant Thornton specialist or read more on our Technology and Communication pages.

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