Business to business hi-tech start ups are continuing to grow, as dot.com launches continue to suffer, according to a leading dot.com funding specialist.
Business-to-business start-up propositions lodged with FirstStage Capital have increased in the last six months from 30% to 40%, with the less stable business-to-consumer start-ups in decline from 39% to just under a quarter of all proposals.
The figures from FirstStage, the online funding portal for start-ups and technology business, also indicate the stock market slide on both sides of the Atlantic has forced ‘a marked quality improvement’ in business plans.
Cash-hungry new economy businesses submitting business plans good enough to list on the www.firststagecapital.com website have doubled over the last quarter to 8% from 4% between April and June.
Would-be new economy entrepreneurs are also expanding into a far wider area of business categories, with the number of start-ups offering multi-platform enabling technologies such as wireless and broadband rocketing from 13% to 36%.
FirstStage Capital chief executive Jason Purcell said: ‘Our figures, plus anecdotal information from colleagues in the venture capital industry, indicate growing pains in this sector are giving way to a more mature approach.’
Larger than ever US venture capital figures for the April to June period and the knock-on effect of the chancellor’s tax allowance for private investors have created a ‘quantum leap in the state of the market,’ says Purcell.
Microchip designer ARC International is one of a handful of technology companies looking again to raise funds on the London Stock Exchange with their shares doubling on the first day of trading. Purcell said: ‘The UK is known for its innovative capabilities but has been slow to turn this into sustainable businesses.’
He added that universities are now much keener to commercialise research and are finding that there is better access to funding. ‘Technopreneurs are shedding their understatement and learning how to market themselves better,’ he said. ‘We are in for a sustained period of activity in the hi-tech sector.’
In May, PricewaterhouseCoopers research claimed 25 of 28 listed dot.com companies on the London Stock Exchange and Alternative Investment Market would run out of funding by August 2001, and one in four companies had six months of cash left. ‘The companies’ cash burn rate is often not transparent,’ said Kevin Ellis, partner with PwC’s business recovery services.
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