By Elly Williamson on 16/12/2022
Elly Williamson, Head of TMT, discusses the difficult year companies have faced in 2022 but how the crucial importance of companies in this sector may lead to changing fortunes in the year ahead
2022 has been sobering for technology companies. After an extended run of many years’ impressive growth, 2021’s dazzling array of statistics might well have been a high-water mark for some time to come. In 2021, for example, tech and consumer internet IPOs in the UK, which were 29% of overall listings, raised £6.6 billion, more than double 2020’s figure (London Stock Exchange data). The European and Israeli start-up scene also saw capital invested cross the €100 billion threshold for the first time, also more than double the previous year (PitchBook data).
Equivalent numbers for 2022 are not yet in, but expectations have been reset. The mood changed early in the year and has crossed from poor performance by tech stocks on public markets into downward pressure on valuations in private markets, particularly in later stage fundraisings. Online lists detailing which start-ups and scale-ups are hiring have been replaced by redundancy trackers. Even big tech got smaller, with recent high-profile reporting on job cuts at Alphabet, Amazon and Meta.
But it would be rash to bet against the connected T, M and T sectors in 2023. We might have seen some cooling of the pandemic passion for a life lived almost wholly online, but no one doubts the future importance of innovative, connected ways of communicating, working and spending our leisure time. Technology is now firmly embedded as the infrastructure relied on by enterprise, governments and the individual, and there is so much more it can offer in terms of efficiency and improvement.
We might see greater emphasis in the short term on enterprise spending rather than discretionary consumer spending, and some trading down to lesser products and services, but achieving the growth we need to pull us out of an economic hole will almost certainly require a helping hand from productivity enhancing technology. 2023 might yet see a return to a longer-term trend.
Communicating against this backdrop isn’t easy but your growth might still require profile raising among customers, recruitment or fundraising. Think what concrete achievements and other points of reassurance towards future goals you can provide. If you’re not profitable, what’s your path to profitability? Are you now the right size and shape for the next chapter? How can you evidence that demand for what you offer is still growing? The foundations of success are often laid or strengthened in challenging times and companies which communicate consistently earn the greatest credibility.
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