BLM met with Konstantin Sidorov, who is the Founder and CEO of the London Technology Club, to get his thoughts on how Coronavirus is impacting the UK tech sector.
Can you tell us more about the London Technology Club
LTC is an investment club that connects private capital from all over the world with VC’s and institutional investors to fund growth and late stage technology companies, and generate exceptional returns for its members.
The club (which is regulated by the FCA) provides its members with access to unique and highly sort after investment opportunities and insights typically not available to private investors.
For example, the club has successfully invested in a number of the world’s best-known tech challenger brands including AirBnB, Monzo, Didi and Revolut. LTC invests along-side its members and does the legwork to make finding opportunities easy (sourcing the deals, structures, smart due diligence via partners).
How is the current crisis affecting the funding of growth in late stage technology firms?
We have seen a slight shift in power from the founders vetting, picking and choosing investors for their cap table to now more in the hands of the investors. As with all venture capital, you receive a mix of opportunities, but the quality we feel has gone up not down of late.
We continue to be a good source of the VC firms to access private investors, we’ve seen the best VCs being even more proactive in approaching us of late.
Why would you say that the time to invest in technology companies is now?
Our view is that the crisis will only accelerate many of the macro trends that we are already seeing in terms of the growth of certain sectors. At a micro level, we believe that some of the most successful investments happen during downturns, where there is greater access to talent and ideas. Companies that are forged in the fire of a downturn are often stronger, more resilient, more innovative and geared for growth when the market returns.
So whilst the market soothsayers make predictions about when the bottom of the market will be and what the recovery will look like, we already know that it will be the tech sector that will lead that recovery.
How does the UK tech investment sector compare to other countries in Europe?
Last year alone venture capital funding for UK tech firms reached a staggering £10.1bn. This places the UK significantly ahead of other European countries in terms of tech investment. To put this into perspective, UK garnered a third of Europe’s £30.4bn in total funding, and received more funding than German and France combined.
Figures also illustrate that this trend is set to continue. Venture capital investment increased by 44 percent in 2019. Growth in VC investment exceeded a staggering 40 percent for the third year in a row.
[These figures were obtained by research compiled by Tech Nation and Dealroom.]
What trends do you see emerging from the tech sector, moving forward?
The arrival of Covid-19 has sparked a major turning point in consumer behaviour and accelerated the ‘remote revolution’ which will, in turn, have long term consequences for the tech sector and the economy of the future.
As large swathes of the population spend time at home self-isolating or ‘social distancing’ for long periods, we are forced to find new ways to work and socialise; access goods, services and entertainment; take exercise; educate their children. All of which are now being facilitated by harnessing technology.
In healthcare, we are likely to see great strides made in telehealth, big data projects, machine learning accelerated medicine discovery and analysis. At the other end of the health spectrum, we are likely to see a big change in the way people exercise with personal trainers increasingly teaching virtually.
In the business environment we are already seeing massive uptake of communications tools, project management tools and remote working platforms. The crisis will rapidly accelerate the development and adoption of online education and remote training platforms and tools, both in the education sector and the workplace. Online and cashless payments infrastructure and tech have seen huge growth in recent years and will continue to grow exponentially.
And what further trends do you see happening due to the move to remote working?
Similarly, the remote revolution will speed up the growth of E-commerce, online supermarkets, food delivery, and likely hasten the demise of bricks and mortar retail in many segments of the market.
To manage this shift to remote operations during the crisis, people and businesses need to, and are, rapidly upscaling their broadband connections and datacentre infrastructure which in turn likely lead to fast tracked digital transformation and cloud migration.
Alongside the shift to a remote economy, there are macro trends that continue to accelerate such as the roll out of 5G, so there are strides being made in 5G sub systems for example. Similarly, we are likely to see developments in telemedicine particularly the intersection between healthcare and IT and investment in the infrastructure that supports it. In industry and manufacturing we are seeing the growth of operational intelligence – digital twinning to improve high value industrial processes.
In emerging markets, just as financial inclusion technologies have been gathering pace in the last five years, we are also likely to see a push towards healthcare inclusion – using to technology to leapfrog current issues. Similarly, we are likely to see big moves in Agtech and a move to more localised production.