Published: Feb 14, 2024
Focus:
Insights
Technological innovation and entrepreneurship are crucial for long-term economic development. Often seen as a disruptor, technology will likely be a catalyst for economic expansion and resilience and will play a pivotal role in helping UK Plc get back on track.
The UK currently has one of the slowest Gross Domestic Product (GDP) growth rates in the G7 and there have been some challenges in recent years due to a number of micro and macro economic factors. However, the North East has shown resilience and innovation, becoming a growth area for start-up and growth software companies. David Nixon, Senior Investment Manager at Maven, explains how the digital sector has thrived despite the volatile economic situation.
"The recent uncertain economic environment has not only provided challenges, it has also presented great opportunities. We’ve seen portfolio companies come to terms with increased price sensitivity from clients, overhead volatility, tight labour markets, growing competition as some software markets mature, and longer sales cycles. But still, the digital sector represents an integral part of the UK’s economy. New technologies help drive efficiencies and improve productivity, and as such software remains a high growth area."
David Nixon, Senior Investment Manager at Maven
The UK’s digital market was valued at over £50bn in 2023 with digital technologies, cloud computing, AI, and Internet of Things (IoT) increasing as more and more businesses are adopting a tech-led strategy and implementing digital processes. The success of cloud technology and platform business models has contributed significantly to the tech industry’s value creation.
Kevin Beales, Founder of MySalesCoach, emphasises the challenge of achieving extraordinary levels of growth, stressing the importance of understanding the market and proving the need for a product before building it out. This sentiment is echoed by Gilbert Corrales, Founder of Leaf Grow, who highlights the necessity for technology businesses to continuously innovate and improve their products to stay ahead of the competition.
"There are some great success stories in the North East but achieving extraordinary levels of growth is a real challenge. In an ideal world, once you understand the market, if you build a solid product, customers will pay for it. Technology businesses need to take time to prove the need for their solution or product before building out their idea. And continuing to improve and innovate your product as you gather data is where you stand out from the competition."
Kevin Beales, Founder of MySalesCoach, sales coaching as a service platform
"Building a technology business is unlike many other industries and creating technology to scale sometimes requires a complete change of plan. Often as long as you are very good at what you do, focussing on one problem and building solutions, not features to solve that problem, there is opportunity for growth. To stay ahead, technology businesses must continuously embrace and leverage the latest technologies and trends, turning challenges into opportunities."
Gilbert Corrales, Founder of Leaf Grow, an end-to-end performance marketing services platform
Looking ahead, the Industrial Internet of Things (IIoT) is set to connect more than 50 billion devices by 2025, marking a significant leap in technological progress. In navigating this landscape, Pete Daykin, Founder of Wordnerds, shares insights from his experience, emphasising the need for technical expertise or strategic use of open-source solutions to develop innovative tech efficiently. Paul Lancaster, Founder of UK Startup Week and PLATFORM, goes on to summarise the importance of focusing on innovation, effective marketing, securing funding, and building strong teams to thrive in the digital space.
"From our position as an early-stage business, taking part in accelerator programmes, most businesses find you either need a very technical team to build something deep tech or you need to leverage opensource or you need a lot of capital to hire a good team. Otherwise, it’s very difficult to develop real or innovative tech that no one else can. You can spend a year building software before you get to the validation stage to see if anyone is going to buy your solution, or you can use opensource which is arguably faster but worse quality. But once you get to a certain size you can invest in time and resources and people to build something new and different."
Pete Daykin, Founder of Wordnerds, an innovative customer feedback analysis tool
"I’ve spent a lot of time with Tech Nation and we were good at empowering companies across industries to build more efficient and effective digital solutions. To thrive in this space, businesses need to focus on innovation, market your products effectively, get funding and build a strong team. Target gaps in the market for innovation, be agile and lean with costs, look to partnerships and collaborations, attract top talent and seek funding to support your initiatives. Overall, the pivot to digital across the wider economy is driving demand in the sector."
Paul Lancaster, Founder of UK Startup Week and PLATFORM, a monthly event for entrepreneurs
The reciprocal relationship between technological innovation and economic growth is undeniable. Investors play a pivotal role in fueling innovation, and as we stand on the brink of the AI tech revolution, businesses must embrace innovation as a catalyst for growth. Innovation is not just a buzzword; it's the driving force behind success. To stay ahead, technology businesses must continuously adopt and leverage the latest technologies and trends, turning challenges into opportunities.
Maven is one of the UK’s most active private equity investors and is passionate about working with ambitious technology-led businesses to achieve their strategic goals and maximise growth potential. If your business, or the business you advise, is looking at private equity as a solution to fund future growth we would love to hear from you. Speak to one of our investment team by getting in touch at funding@mavencp.com.
