So far this week the business world has not been kind to London’s Tech industry, as a series of damaging headlines threatens to halt the progress of the Silicon roundabout;
After Just Eat became the first Company to take advantage of the LSE’s new fast-track listing rules for Tech companies, and saw its shares climb 9% on their first day of trading, prices have swiftly returned to pre IPO levels.
The slide mirrors a worrying global sell-off, particularly in the US, as a trickle of negative news-flow has seen the tech-heavy NASDAQ fall 1.6% today, despite optimism surrounding the Fed’s release of minutes from its open market committee meeting.
A sense of “after the Lord Mayor’s show” is pervading the Tech sector, causing investors to revisit bullish valuations with a more cautious eye, bad news for the likes of AO World, the online appliance seller, which despite announcing it is on track to match earnings predictions of £11 million pounds, has seen its initial £1.5 billion valuation take a palpable hit.
Perhaps it was unreasonable to expect a Company delivering profits of just £9 million to maintain such a sky high valuation, and when big players such as Facebook and Amazon are suffering too, with share prices dropping 4% this week, the minnows may be about to find out that, as Warren Buffett famously put it, “it’s only when the tide goes out that you find out who’s been swimming naked.”
In amongst the general malaise however, there are plenty of reasons for London investors and smaller companies to take heart:
Silicon Valley cloud computing firm Egnyte has opted to use London as its European headquarters, intending to capitalise on post Snowden crisis growth, and expects to create up to 100 new jobs in the process.
Haydale Graphene Industries, brainchild of Durham University alumni, has announced that it will list on London’s AIM market, raising £6.6 million on annual revenues of approximately £0.1 million, and defying critics of the substance, which has been affected by “boiler room” style companies seeking investment for “dubious” projects. Graphene has long been touted as a versatile product that could one day replace silicon, and with backing from the European Union, Haydale is displaying all the right credentials and anticipates rapid growth.
It’s not Tech, but is it art? A gallery in East London named My Art Invest, nicknamed “gallery 2.0”, allows visitors to buy shares in artworks as they wander around the gallery. Using an Ipad, gobsmacked art aficionados can invest on the spot, and if you end up with a 25% stake, you can even take the work home with you (for up to 3 months). Launched today at 150 Commercial Street, works on display include Banksy’s Heavy Weaponry. Founder Tom-David Bastock claims it will help to “democratise” the art market in London. City traders will finally have something to do on their lunch-breaks.
None other than George Osborne’s brother, Theo, just 29 years old, is preparing the ground to launch an Investment fund aimed at smaller Tech Companies. “Find them, Fund them, Mentor them” is the mantra of the youngest of the 4 Osborne brothers; the fund will be called Force Over Mass, and has been set up with Martin De Wever, formerly a credit trader at HSBC. If Osborne can’t stoop to conquer, Shoreditch residents may have to get ready for some serious austerity. No knocking off early for a quick pint, even if they are a penny cheaper than last year!
Meanwhile, as Facebook continues to make more market moves than an over enthusiastic teenager at an all-night rave, execs have decided it’s time to get rid of the sites instant messaging service. So frustrating, unless you have WhatsApp of course.
Finally, more good news for Brits in Tech. Coup enthusiast and design guru Jony Ive has ousted “slide to unlock” inventor Greg Christie from Apple, as he takes full control of both hardware and software at the Company. Apple have been quick to point out that Christie had been planning to retire anyway, and cash in his shares, although rumours persist that he had simply become fed up with Ive pissing on his chips.