Investors put off by volatility after tech floats
THE IPO highs and lows of Silicon Valley giants like Twitter and Facebook have left UK tech firms struggling to secure funding, according to accountancy firm BDO.
Research conducted by the company shows that 33 per cent of bosses at small and medium-sized technology and media companies said the hype and subsequent share price volatility of the world’s leading tech firms had made some investors wary of the sector. Such firms also blamed a general lack of understanding from lenders and an inability to explain how new products might generate revenue.
However, venture capitalists, private equity investors and alternative funders interviewed by BDO told analysts they were “crying out” for opportunities. Citing high levels of capital and “competitive deal flows”, funders urged medium-sized tech firms to come forward. Some even claimed there are not enough investment opportunities to go around.
Paul Russell, partner at BDO, said the news should be a fillip for tech and media firms losing sleep about where their funding tranche would come from. “The key to securing funds is knowing where to look – and who to talk to,” he said. “Real value could be gained from alternative sources of finance, such as crowd-funding and peer-to peer-lending.”