As industries seek to adapt and evolve, so does its relationship with technology, take industrials as an example, companies within this sector have continually made technology investments to escape obsolescence. The move of technology from a vertical into a horizontal also has significant consequence for investment and exits on the part of both financial and strategic parties.
Encouragingly, acquirers such as venture capital firms now have the capacity of more than a trillion dollars in dry powder, this promises increased transaction volume. To further drive business, start-ups have also seen a prevalent increase in deal size and investors have taken a larger ownership position at even earlier stages. Investments in US venture-backed firms now amount to a ten year high this last year.
Another key determinant for Venture Capital is the IPO market for technology companies. In recent times, investors have viewed the IPO technology space as lukewarm; a well-positioned time for firms to go public, particularly as markets persist to unprecedented highs. Furthermore, companies that have gone public achieve continued growth which has created reassuring feedback indicative of an optimal IPO opening for tech.
In former years, technology trends anchored around cloud-based solutions, use cases in software posed considerable challenges to scalability; however, cloud-based applications remain a driving force in investor and strategic interest cross all traditional industries.
Other technologies now have strong footholds within the current market; Blockchain technology, for instance, is emerging in swift fashion. After the mass trend of cryptocurrency at the end of last year, new starters within blockchain are growing their investment-related solutions, it has also met consumer demands and challenges surrounding regulation.
Artificial intelligence (AI) seeks to be the new and upcoming solution, with an opportunity that promises to expand at a rapid rate. It may have the potential to fundamentally disrupt all sectors— education, communication, consumer goods, and even social change. Ethics and regulation surrounding AI will be fascinating.