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Entrepreneurs and tech experts claim UK's tech sector is not in another bubble

Sam Shead | June 6, 2014
The technology sector is not repeating its late-nineties bubble and London's ecosystem can go on booming, a panel of experts agreed at a debate hosted by Internet World in London this week.

Meanwhile, Tom Leathes, co-founder and CEO of online travel website top10.com, said: "The funding situation in London is much better than it was three or four years ago. There are more active angel investors and we're seeing some really big deals from VCs like Index, Balderton and Accel Partners."

However, Langley pointed out that companies across Europe are losing out to their US counterparts because of a funding gap.

US vs. UK
"In Europe, there is more focus on getting the best product and the best technology - but they're not pushing as hard on sales and marketing," she said. "A lot of this comes down to the ability to raise funding," she said. "In the US, these companies can raise $60 million or $70 million - whereas in Europe, it's more like $6 million or $7 million. This is a big challenge as it is holding European businesses back."

Back in the 90s, a combination of rapidly increasing stock prices, market confidence that the companies would turn future profits, individual speculation in stocks, and widely available venture capital created an environment in which many investors were willing to overlook traditional metrics, such as price-earnings ratio, in favour of basing confidence on technological advancements.

When the bubble burst, some companies, such as Pets.com, failed completely, while others such as Lastminute.com survived. Established, more traditional tech companies such as Cisco, lost a large portion of their market capitalisation but managed to remain stable and profitable.

 

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