The Smart Money is Investing in Tech

A businessman checking his investments on his phone.

Photo credit: Shutterstock

Where is the smart money going when it comes to tech companies? Some leading experts will be exploring that subject at Fortune’s upcoming Brainstorm TECH conference.

Anton Levy of General Atlantic, Kirsten Green of Forerunner Ventures, and David Trujillo of TPG will share the stage in a panel discussion on what industries, ideas, or trends they’re betting on; what they’re seeing in the tech space; and the changes they’re watching for.

It’s no surprise that technology is on people’s minds, with the June ransomware attacks and Microsoft’s announcement of its new SMB-oriented software-as-a-service bundle. A recent article in Institutional Investor says that tech deals are booming in the PE sector.

Not only that, but 2017 has been a boom year for tech IPOs, with Snap going public in March, and Carvana, Cloudera, Elevate Credit, Mulesoft, Netshoes, Okta, and Yext also making their public trading debut. The aggregate value of these IPOs is a whopping $37.5 billion, with Snap making up the lion’s share at a valuation of approximately $20 billion.

Today’s tech IPOs are already light years ahead of those in 2016. By May of 2016, only two companies had gone public. Between January and May of 2017, more than four times that number went public, and more public offerings may be on the horizon. (Tech companies that have been floated as possible IPOs, despite rigorous denial from some of them, include Airbnb, Dropbox, Pinterest, Spotify, and Uber.)

Because of the growing success and valuation of tech companies, private equity money is now flowing into the sector, accounting for almost 40.1 percent of U.S. buyouts last year. This is the highest proportion on record. Firms with a broad range of investment interest, such as General Atlantic, KKR, and Carlyle, are jumping into the game and are being joined by tech-focused PE firms like Golden Gate Capital and Siris Capital.

“An increasing number of tech-related companies have moved beyond the traditional territory of venture capital funds, and the sector as a whole has increasingly become a target for the wider private equity industry,” Christopher Elvin, Head of Private Equity at Prequin, told Institutional Investor.

China has also become a PE magnet. However, concerns about the possible imposition of U.S. trade tariffs, plus concerns about its credit, real estate, and technology sectors seem to be cooling interest in the nation. However, when risk and potential are calmly weighed, China may be the most promising private equity market in the world.

This echoes sentiments that General Atlantic CEO Bill Ford shared in a recent interview with Bloomberg. “We’ve been bullish on China despite lots of mixed sentiment—the country is succeeding in pivoting its economy from export and manufacturing to services and consumption,” he said. “We’re seeing companies there generating 15 to 20 percent-plus nominal GDP growth.”

With so many potential IPOs on the horizon, and some really promising companies to be found in emerging markets, it’s no wonder that the smart money is betting on tech to be the next private equity profit-maker.

I will be curious to see what Levy, Green, and Trujillo share at Brainstorm TECH about their vision for private equity in the tech sector and if it matches up with what other observers have been saying.

Country Western Fashions and Culture Are Rocking Digital Retail Space

Western fashion

Keyword search has had more impact on the sale of cowboy boots than actual, authentic, 100% certified, real-life cowboys did. How is that even possible, you wonder? Well, Country Outfitter was the keyword that delivered gold in the form of a deep and loyal consumer niche. Acumen Brands Vice President of Marketing, Ben Roberts, recognized that their small company Country Outfitter was a potential gold mine. Cowboy boots, southern culture, and country music eventually built a seven-figure e-commerce company.

Roberts’ expertise and bold strategy attracted supportive investors searching for innovative and productive opportunities in unexplored markets–investors like Anton Levy, Chairman of General Atlantic. Levy is currently on the Board of Directors of Acumen Brands, and he understands that these type of strategic digital retail investments pay off generously over time.

Cowboy boots are more than something to protect your feet when you’re roping cattle or shopping on Rodeo Drive. They’re symbols of a way of life. Over the decades, these ordinary work boots have developed a special appeal and have grown from off-the-rack work products to luxury, collectible items. They have achieved celebrity status by association with country music legends like Hank Williams, Tammy Wynette, and Elvis Presley.

Acumen Brands succeeded because they took an authentic and slow growth approach to the development of their niche. They researched and understand that people who love the country western lifestyle were interested in living a way of life that integrated clothing, music, country community, and culture. A customer who is a member of a community will be available for a long-term relationship. These shoppers don’t want trends. They prefer a quality item that is going to last. Country Outfitter brought their community to Facebook, and within four months they had 7 million online fans.

Competing Blogging Platforms Raise Millions with help from Tech-Savvy Investors

Blogging

Squarespace is a friendly digital publishing service providing users with the tools needed to share their unique—and possibly valuable—content on the Internet.

Squarespace is a flexible tool— much like its major competitor and industry stalwart, WordPress. If you know how to write code both content management systems (CMS) include features that allow you to build a website as well as a blog. Users often choose Squarespace over its competitors because the interface allows them to easily embed videos and other third-party content for $8 per month.

Squarespace appeared on the Forbes Most Promising Companies list in 2013 and continues to grow, having recently launched a recruiting drive to hire new engineers. The launch of Squarespace 6 continues to attract users and investors.

The company announced in April that their total outside funding reached $78 million. Anton Levy, CEO of General Atlantic, brought $40 million to that fund. Levy has long included Internet technology as part of his investment strategy and, in a show of confidence, currently serves on the Squarespace Board of Directors.

Despite Squarespace’s popularity, the industry leader in the growing CMS industry is WordPress, owned by Automattic, and launched in 2003. WordPress offers a stable platform for publishing and accessible user interface.

WordPress raised $160 million in venture capital this year, bringing their total funding to $205.7 million, with a valuation of $1.2 billion. The company is reluctant to share statistics. In 2013 it claimed to to run about 19 percent of all websites. Industry sources report their share has climbed to 23 percent in 2014.

WordPress and Squarespace are leaders in a highly competitive field. YouTube has been a leader in turning unknown hobbyists in Internet celebrities with millions of followers, national sponsors, and the potential to crossover into traditional media like television. YouTube sensation, Dinsneycollectorbr, is an anonymous star with impressive statistics, earning $4.9 million a year unboxing children’s toys. The videos are popular with children and have recorded over 237 million views.

Everyone dreams of turning their passions into profits and following the success pattern of Internet millionaires. The problem is getting their ideas, passions, and antique thimble collections published and accessible on the Internet. Squarespace, WordPress, and their competitors are betting that there is no limit to the human desire to share, discover, and engage.

Klarna is Among Europe’s Fastest Growing Companies

After generating revenues of more that $319 million in 2014, Klarna is quickly becoming one of Europe’s fastest growing companies—but it didn’t always start out that way. The Financial Times recently profiled the company, which was started by two young, relatively inexperienced, entrepreneurial-minded Swedes who wanted to find a way to innovate the online retail industry.

Writes David Crouch for FT.com, “When two Swedish teenagers’ luck ran out and they had to sleep rough while hitchhiking in the US, they had no idea their shared hardships were forging a friendship that would launch an ecommerce company that is taking on the world.” Niklas Adalberth and Sebastian Siemiatkowski launched Klarna in 2005 with the vision of revolutionizing the way that people shop online in Sweden and beyond. Their hitchhiking experience years before bonded them as business partners, and their desire to forge ahead despite their inexperience with digital commerce is what laid the foundation for a company that helped retailers sell more than $9 billion worth of goods last year.

“Klarna was founded in Stockholm in 2005 with the idea to simplify buying. Today we’re one of Europe’s fastest growing companies,” explains the company. Today, Klarna employs 1,200 people and is active on 18 markets. Its leadership includes founders Adalberth and Siemiatkowski, as well as their friend and third co-founder Victor Jacobsson, Anton Levy of global growth equity firm General Atlantic, and Jon Kamaluddin, the former CFO of online retailer ASOS, among other financial experts.

The powerhouse team that runs Klarna in 2015 is a far cry from its early days a decade ago, when hardly anyone wanted to take Adalberth and Siemiatkowski seriously. “We were three 23-year-old kids with no finance and no experience beyond flipping burgers,” explains Adalberth of their humble beginnings. “But afterwards, one entrepreneur came up and said: ‘Don’t listen to the old people.’ That was very important, it gave us some spirit.”

The three young entrepreneurs took this advice and ran with it, which would prove to pay off tremendously. Crouch calls Klarna a “unicorn,” a term that refers to “a tech start-up valued at more than $1 billion,” and also notes that it’s one of the few in Europe to achieve that title. Indeed, Klarna is one of Europe’s fastest growing companies, and if 2014’s success is any indication, it seems that the company is only going to continue to thrive.

SnapAV Introduces Wirepath ONE

Charlotte, NC-based SnapAV is one of the leading vendors in the world of custom installation. Featuring innovative leadership that includes founder and chairman Jay Faison, CEO Craig Craze, and director Anton Levy, SnapAV is comprised of a group of “unique individuals with vastly different experiences and skill sets,” explains the company. Together, these innovative minds have helped to develop a company that is dynamic, professional, and highly successful in its industry.

The range of products that SnapAV provides is massive, and includes everything from surveillance devices to projection screens, and everything in between. It was recently announced that SnapAV is currently developing its latest product: a product called Wirepath Organized Network Equipment, or simply, Wirepath ONE.

Wirepath ONE is essentially a central hub for all of a home’s electronic devices to connect to, making it easier to stay connected in a clean, simplified way. The product was designed with connected homes and homeowners in mind, and was “specifically engineered for today’s network-centric media systems.” According to SnapAV, “Wirepath ONE media enclosures and doors make it easy to consolidate, organize and transform embarrassing systems into showpieces that are more reliable and easier to maintain and upgrade,” of how this new product will allow for easier management of a home or office’s devices.

Explains Lisa Pienta, a manager of SnapAV’s new Wirepath ONE division, “Wirepath ONE is designed around a connected home – making people’s lives simpler,” of the intention behind the product. “Today’s homes are moving toward a central hub of technology,” she continues, “This started years ago with the punchdowns of landlines, cable and satellite boxes, and but now people are also using routers, sound systems or streaming devices like Apple TV.”

As more and more people increase the amount of technology they use at home on a day-to-day basis, products like Wirepath ONE will help to create centralized tech hubs that are easy to adjust and manage. Learn more about this new product and how SnapAV continues to anticipate the needs of its customers in this article from CE Pro.

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