This is because many businesses are having to rely upon technology to bring about years of evolution in a short space of time in order to survive and keep their people busy.
However, the upside is not prevalent for all tech businesses. Expedia’s share price is down 23% since the middle of February, although this itself is a significant improvement from a price of $46 (and a drop of 63% since mid-February) at the peak of the COVID-19 crisis.
So, which tech industries are the winners and losers?
The winners
Education: Sectors without a significant online presence, such as education, are now moving online and bringing marketplaces with them. Schools and Universities have had to introduce virtual classrooms and e-learning at short notice. For Higher Education this could represent a significant step change as the costs of physically attending University are increasingly limiting for many.
Remote working: This will reflect changes in wider society as well. Technology that improves our ability to live our lives remotely has the potential to thrive. Digital payment processors are benefitting from retailers focusing on their online presence and of course popularity of video conferencing facilities like Zoom have skyrocketed.
Cyber security: The Coronavirus pandemic has created cybersecurity risks due to the temporary closure of businesses impacting normal IT security procedures, as well as the need to change access rights to facilitate the use of key systems whilst working remotely. In this context, all businesses need to revisit their IT security risk, and therefore tech companies in this sector are seeing an uptick in demand.
Healthtech: There are also significant development opportunities in Healthtech. One example includes solutions that monitor both the security of the home and the wellbeing of the people within it, thereby bringing comfort to the family of an isolated elderly relative.
All businesses need to revisit their IT security risk, and therefore tech companies in this sector are seeing an uptick in demand.
The losers
Travel: No surprise that travel technology, such as online booking agents, have seen a significant drop off in activity as the impact of travel restrictions takes its toll. Many of those companies are pivoting their offering to focus on ‘staycations’ in the hope of capturing revenue for the late summer. Airport quarantine rules, and nervousness about future peaks between booking and travel dates, will have an impact on booking levels for some time.
Property: Proptech is impacted by the downturn in the property market, which is a typical reaction to a recession. There is opportunity for these businesses though as the change in our working habits – particularly a more permanent shift to agile working – is likely to change our demands of our working environments and living spaces.
In summary
The tech industry is the home of the start-up and scale-up. Government support for these businesses was slow to arrive and left many treading water. The arrival of the Future Fund, and the easing of access to CBILs (through Bounce Back Loans) brought some relief, but it’s also fair to say that tech businesses who had earmarked the summer for their next funding round have been significantly impacted.
Would you like to know more?
If you would like to discuss any of the above, or have other queries about how you can make the right decisions for the future of your business and your income, please contact your usual Blick Rothenberg contact or one of the partners to the right.
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