Tech investment: Start-ups continue to drive innovation
On the face of it, it’s been a pretty grim year for Big Tech. Between them, Amazon, Google, Meta, and Twitter are set to let as many as 35,000 employees go. Apple has released 100 contracted recruiters as part of a slowdown in hiring, and HP, Cisco, and Roku are among tech’s other big names to be making cutbacks.
This can feel like a scary time to be in tech, but focussing on headlines like these distorts the real picture. While many companies and business models are being truly tested for the first time, there is still plenty of growth, and opportunity, within the technology industry. Here, we’re shining a light on where these opportunities lie, and which areas of tech are currently attracting the most investment.
Demand for devs
While it’s a painful experience to go through, those engineers being laid off by the big tech firms will find themselves in high demand on the other side. According to Tech Nation’s June 2022 update, demand for UK technologists is at record highs, with over two million open vacancies over the past year. Development has always seen very high employment rates, with the skills gap only widening over recent years, so many engineers will see this as a chance to move from older, more stagnant companies within the tech space into new, more innovative corners of a vibrant ecosystem.
Technologists also appear to be shielded from the cost of living crisis, with London ranked second globally (behind New York) for tech salaries compared to cost of living. Edinburgh, Birmingham, Glasgow and Leeds are also highlighted as locations with strong tech salaries compared to living costs.
Start-ups still attracting investment
One thing that’s important to remember is that much of the current narrative around the tech industry centres on big tech in particular. In many ways it’s a reflection of the fact that once-innovative companies like Google and Meta have become big, cumbersome and corporate, the opposite of the dynamic, innovative gems they started out as. They were perhaps overdue for a haircut.
Investment in tech start-ups and scale-ups is off the chart this year. The first half of 2022 saw record investment into the UK’s tech sector, with the £12.4 billion VC capital raised beating the total raised throughout the whole of 2020.
More than half of this funding was raised by Fintech companies. London attracted more Fintech investment than any other city in the world this year, and the sector’s growth continues to boom.
For example, credit start-up Yonder secured £20 million in seed funding in March, while Bumper, a buy now pay later (BNPL) provider for vehicle repairs, extended its Series A with £26.1 million from investors including Jaguar Land Rover’s investment arm.
In the States, payment platform Stax secured a $245 million funding round at an above $1 billion (i.e., unicorn-level) valuation in March.
The key to gaining investment for fintech start-ups like this is innovation; breathing new life into old business models, or creating new ones. Take Yonder’s CEO Tim Chong, talking to Sifted after their funding round:
“If you look at credit cards today, by and large they don’t look that different to 60/70 years ago,” he said. “They’re all either doing cashback or Avios points, which stem from partnerships with American Airlines six decades ago.”
Yonder, targeting a market of five million “credit-invisible” millennial ex-pats, uses open banking to circumvent the need for a credit score, thereby enabling this market to access credit when they otherwise wouldn’t be able to.
Big tech’s struggles in 2022 have been closely linked to inflation and a slowdown in consumer spending. When money gets tight, lots of people cut non-essential spending, like their Netflix subscription. Netflix’s layoffs this year followed its first quarterly fall in subscriber numbers in over a decade. Similarly, when sales are down and money gets tight, companies often reduce their advertising spend on platforms like Google, Facebook, and Twitter.
However, even when consumer spending falls, businesses still need robust digital security in place - perhaps even more so during tough economic times. As such, cybersecurity firms are a robust industry for technologists at a time when many big tech firms are struggling.
The trend doesn’t show signs of slowing any time soon. Cybersecurity threats will diversify in 2023, and the skills and technologies available to repel them will need to evolve quickly to keep pace. This will result in increased demand for security technologists, with Deborah Golden, Deloitte’s US Cyber & Strategic Risk leader, saying that “organizations are scrambling to fill required positions” in cybersecurity.
2022 has been a turbulent year, and any period of upheaval brings with it short-term pain for lots of people affected. There is, however, a resilient, thriving industry out there for technologists that have been affected by recent layoffs, and those who will be in future. The best thing about the tech industry is that innovation inevitably leads to further innovation, and as the challenges the world faces continue to evolve, so too will the opportunities for those innovators dedicated to solving them.