Investing in the Digital Boom
April 11, 2014 Leave a comment
Unlike the dot-com boom of the early 2000’s, investors are now realizing that many technological companies have solid platforms and receive tangible revenues. Many firms are looking to get a piece of this successful digital boom, including big names like TPG, Facebook, CVC Capital Partners, and KKR.
In late 2013, TPG invested roughly $90 million into Uber, a phone app that people can use to get a driver to pick them up at their GPS location and take them to their destination. Many big-name companies are investing in phone apps, the largest being Facebook’s high profile acquisition of WhatsApp—at $16 billion.
King, the creator of the highly successful Candy Crush Saga, has established itself as no small firm. Creating and selling merchandise outside of its digital realm, the London-based Apax received a $3 billion profit, having invested $29 million initially in the company back in 2005.
CVC Capital Partners is looking at getting into technology deals in medium sized groups. Henry R. Kravis and his company KKR, a private equity firm, is also planning to make the jump into such investments. KKR plans to invest in small yet fast growing technology companies, which is outside of what the investor usually seeks. Some tech companies tend to be riskier investments. They tend to be smaller, less mature and involve themselves in backing swift expansion.
The knowledge that so many digital firms can go ‘viral,’ expand quickly, and go global, has big name investors eager yet cautious. Many acknowledge that becoming a high tech investor requires a deep knowledge of the technology. Many investment companies have the capital, however most struggle with the technological expertise to identify soon-to-be successful tech firms.