Reportedly in 2016 an enormous £6.7 billion was invested into UK tech start-up companies. The last couple of years have been host to a number of investment success stories in the press. Last year, the innovative food delivery company Deliveroo secured a £350 million investment deal which allowed them to increase their profit by 400%. There has also been a growing amount of interest from corporate giants such as Google and Facebook, but what benefits do they see from sponsoring these tech companies?
Companies are investing in the hope they will eventually become the next ‘unicorn’. In the tech world this is a company which goes on to be valued at more than £1 billion. Though it seems to have become almost a fashion statement to invest in these start-ups, it is the cunning move of an entrepreneur.
Recently companies like Google, Intel and Apple have been competing to acquire AI companies. As tech innovators themselves, they understand that technology is the future. They are searching for technology which cannot be easily replicated, as it allows them to gain advantage over their competitors. Back in 2014 Facebook and Google fought to acquire the little known UK AI company Deepmind Technologies. In the end, Google won after placing a winning bid of £400 million.
There are many reasons why global companies are desperate to get their hands on these tech-pioneers. For one, Deepmind Technologies houses 400 neuro/computer scientists and has plans to significantly expand the team. Gaining this volume of talent is valuable brainpower which can help to keep them one step ahead of their competitors.
The second reason is Deepmind’s credibility, they have been featured numerous times in prestigious academic journals. Admittedly this does give them an edge, but Google have far bigger fish to fry. Artificial intelligence is predicted to be the future of the tech world and when the time comes they want to be the spearhead of the movement.
Surprisingly, even after Brexit investment into UK tech companies far outweighs that of any other European country. Eileen Burbidge, partner at London venture capital firm said: “The UK continues to lead the way in the development of cutting edge technologies and areas such as big data, cybersecurity and ecommerce, creating exciting opportunities for investors from all over the world’.
With the success of the online grocery store Ocado, it is an exciting time to be part of the UK tech industry. Ocado recently secured a £200 million deal with Morrisons and plans to become a B2B technology powerhouse. Their aim is to sell their state of the art technology to supermarkets globally.
David Sharp head of technology said in a statement: “We are going to enable the world’s retailers to be very smart and very efficient in their online commerce offering’. Within the space of a year the company has gone from almost nothing to a front runner in the tech world.
Similarly, Uber received an investment of £250 million, now they have 40 million monthly users, operate in over 80 countries and have a whopping £50bn turnover. As advancements in technology have built in momentum in recent years, the landscape for I.T has changed dramatically. The UK market is thriving and it seems to be the opportune moment to invest in tech companies.
