How much should I invest? Too much or too little?
Dan de Sybel believes that the US is keen enough to invest money in tech startups and this makes them complacent, that gives the UK an innovative edge.
When news broke about Oracle’s payment of $850 million for ad-tech auditor Moat in May, eyebrows were raised from Shoreditch to Silicon Valley. It’s too much money, even in the super-inflated terms of United States venture capitalists.
It showed the appetite for a programmatic tech to reassure digital advertisers they are getting what they are paying for. It also illustrates quite how eager Oracle was to buy into trading terms with Facebook and Google. But, for me, this deal brings the difference in the way US and UK ad-tech companies are financed, and the implications of this for the quality and type of tech innovation that happens consequently.
Ad-tech start-ups in the US are financed at a starting stage in their business life, and with greater sums than those in the UK. To a high degree, this is down to the continuing volatility of the world’s economy. It might good looking on the surface, but investors are nervous and ad-tech stocks are likely to offer a port in the storm, means that there has been an eagerness in the investors to find promising ad-tech start-ups to polish and watch as they become the next Moat.
“When you have to invest without the luxury of that early cash injection you work that much harder to refine your technique. I believe the UK produces more truly innovative technology as a result”
France was in the same position to the UK, until the French govt wanted a piece of the ad-tech scene. Following generous govt offers, there was a flurry of ad-tech start-ups in 2010 and 2012. Yet after 5 years, almost all of these start-ups went away, either into liquidation or swallowed by major French or US tech companies because their funding ran out and their products were lacking the continued investment or sustainable business models. This demonstrates a microcosm of the point I am toiling to make:
“Too much funding too early can be just as bad as too little”.
US investors are interested to chase digital sacred cow that in some cases they are backing anything with the ‘programmatic’ or ‘ad-tech’ tag on it. The upshot is lots of barely differentiated plans getting all the way to market – lot many of identikit technology that is only varied by the way it is sold to buyers.
When you have to do without the comfort of that early cash injection you work that much harder to refine your technology and crucially in the business case. I believe the UK is producing more truly innovative technology as a result; going far deeper regarding data analytics and customization than most off-the-shelf American digital ad platforms permit. It’s why the UK ad-tech invest sector is starting to counterfeit at a global level, taking on the US giants of ad-tech in their personal market.
But Dan, I can listen you say, are you seriously suggesting you wouldn’t have adored that fully-funded sales team and the mental peace of money in the bank? Isn’t this the unmistakable voice of a Brit making the best of adversity through its clenched teeth? Absolutely, there is part of me that would have adored an open-armed American investor to have thrown cash at us in the starting. There’s a reason they are called angels, but I think, as with several things, it’s about balance.
In the US, too much financing in the early stage is spoiling the market. In the UK, maybe we could do with a bit less caution in the investment community.