As the value of FAANG (Facebook, Apple, Amazon, Netflix and Google) falls, where is the next big tech idea coming from? The total value of tech giants FAANG has fallen over $700 billion in just six weeks, this fall represents an apparent turn in the market after a year of record highs for tech stocks. In August, Apple became the first company ever to be valued at over $1 trillion and Amazon became the second just a month later. Clearly even these behemoths of business are not immune to the trends of a Global economy that could be slowing down as we approach 2019.
The fact that only one of these companies has existed for longer than 25 years shows the pace at which the tech sector is moving and continues to move. With this in mind it’s interesting to try to see from where the next big tech company is coming. The pace of technological and societal development that we’re experiencing, means that technology is one of the most meritocratic sectors left, with room for innovation and creativity always available.
All of these ideas begin life as a start-up and so fostering an environment where individuals are encouraged and supported in their ambitions is key. This means providing opportunities for start-ups to secure funding and investment that works for them at the crucial moment that it’s needed, not only at the start but also at the point of growth and scaling the business later on. This kind of support is beginning to materialisein the UK for tech based, innovative companies – known as knowledge intensive – in the form of the new EIS fund structure that provides a tax efficient form of investment, that is government backed to try to reduce the risk to capital, which encourages investors to back small businesses instead of the normal stocks and shares.
Hopefully we will see continued improvements to the facilities in place to create an environment where growth in small businesses is prioritised, as any economy would benefit from the kind of job creation and revenue of the next big idea that could come from anywhere. This is especially important as the world tech sector becomes more and more competitive meaning neglected ideas will receive the necessary support somewhere else, something the UK can’t afford to let happen.
Luke Davis, CEO and Founder of IW Capital comments on the news: “The progress of FAANG stocks this year has been indicative of the state of the technology sector as a whole with optimism fuelling growth and growth fuelling optimism. But as we see the slowdown and turnaround in the markets, it’s more important than ever that innovation and new ideas are supported from the ground up at start-up level. It’s encouraging to see Government backed schemes such as EIS developing a knowledge intensive focus to encourage growth and funding availability, as we want to see more success in the UK in this sector in the same way that we have seen with companies we have worked with such as WeSwap, Ubamarket and Eos who all provide creative solutions to problems that most people face on a regular basis.
IW Capital is keen to help SMEs that need assistance to plan for the future and find the right kind of investment in order to help them reach the next level. If you are interested in investment in knowledge intensive SMEs or finding more information about EIS itself, get in contact with IW Capital to see how we can help you.