How do you find appropriate technology companies to invest in?
The Deepbridge team has decades of combined experience of working in and around the technology sector, both in the UK and internationally. We therefore have strong networks which tend to refer investee opportunities to us and therefore we tend not to have to chase deals. Having grown a reputation for providing smart capital to early-stage tech companies enables us to attract quality tech companies seeking growth funding.
What trends are you spotting in the technology sector?
In the world of technology there are always new buzzwords thrown about which can on occasion be a distraction. For example, most people are now aware of blockchain and artificial intelligence but in reality there are so many uses for such technology that its often not actually the technology per se that is appealing to us as investors, it is the application of such technology, the commercial opportunity, the team and the intellectual property owned by the company. We see some great technology and some really innovative technology but unless it has a commercial market and the right team behind it then it wouldn’t be for us.
What technology entrepreneurs do you admire and why?
Entrepreneurs in general should be admired for having the conviction and appetite to create something of value to all stakeholders. However, those that inspire particular esteem are those that can demonstrate their technology has met a genuine market need and has shown the skill and commitment to scale the business.
Where do you see the future of technology investing going?
Tech investing will only continue to grow as technology impacts the world around us even further. Our portfolio of technology companies highlight how technology impacts all aspects of our lives with our companies working across a broad range of commercial sectors including the likes of the automotive industry, cinemas, medical care, environmental responsibility, logistics and sport. You only need to look at the Fortune 500 which shows tech behemoths like Apple and Amazon now amongst the top 10 companies to understand that technology companies are at the forefront of economic growth.
What makes the technology sector so exciting?
Technology isn’t necessary exciting itself, it is genuine innovation that is exciting. It is innovative new technologies and the applications thereof which often offer that buzz associated with tech investing. There have been countless times where I’ve been taken aback by the potential opportunities for an investee company, and sharing this passion with investors and financial advisers is a genuine pleasure of what we do at Deepbridge.
What drives valuation in technology companies?
Valuing early stage businesses can naturally be difficult as usually they won’t be profitable at the point of investment. However, what we can do is ascertain what we expect the company to do in the future based on market analysis and rational revenue predictions. Coupled with this, we can aim to gauge the potential opportunities for a future exit and the valuation expectations within that sector. Future planning can then be reverse engineered to reach what we consider to be a reasonable valuation now, based on what we want to return to our investors, whilst ensuring founders remain suitably incentivised themselves.
Discover more about our Deepbridge Technology Growth EIS, here.
Ian Warwick, Managing Partner, Deepbridge Capital.