Is the UK tech bubble really about to burst, or is it merely deflating...?
by Startacus Admin
As speculation about the fate of the uk tech industry continues, Amit Shah, CEO of HIROLA, weighs in...
It’s no secret that investment in tech is declining globally, and it has been for a while. The number of deals being closed is at its lowest since 2012. Some commentators are speculating that the tech bubble is about to burst in a manner not dissimilar to the dotcom bust in 2000.
However, the decline in tech deals happening right now is steady and understated. I would argue that, rather than bursting, what is happening to the tech bubble is merely a 
gradual deflation to levels of sensible and sustainable growth. Whether it continues to deflate or whether it has the potential to re-inflate to its original size – or bigger – is something that remains to be seen.
In addition to there being fewer tech deals, the deals that are happening are much larger. There is a growing starkness between the huge acquisition deals of tech giants, such as Facebook and Google, and the smaller scale investments in start-ups and scale-ups.
Part of the reason for this is public perception of tech, with the consumer becoming more and more turned off by the ‘app overload’. The Apple slogan, ‘there’s an app for that’ has become a satirical commentary on the over-saturated market and the vast number of new apps being created by individuals certain that they have created the next Facebook. The public is weary of being repeatedly presented with the ‘next big thing’ in tech, and marketing campaigns for non-tech brands have been capitalising off the back of this.
However, public opinion is and always has been subject to change. On top of this, it is important to account for life-cycle of certain start-ups and apps in the long run. This is particularly true for apps that rely on having a large user base in order to work successfully; these slow-burners will take a while before they reach the heights of the biggest names in tech. After all, Mark Zuckerberg’s empire wasn’t built in a day.
What’s more, there are particular industries which appear not to have been affected by the deflating tech bubble. Recruitment and fitness seem to be bucking the trend, with persistent growth in both areas. For example, the continued development of new fitness tech, such as wearables, means that, for the fitness industry at least, there is still a huge amount of potential for the growth we are seeing at present to continue, and even accelerate. Industries such as these demonstrate the unpredictable nature of the tech market and consumer attitudes.
What this means for the tech bubble then, is a period of uncertainty. The deflating of the bubble is a gradual process; it could spell the end of the tech boom, but there is potential for it to recover. This is particularly true in the UK, where Brexit negotiations could spell either disaster or good fortune for the UK’s tech industry. Only time will tell...
At present, the deflation of the tech bubble that we have been seeing in the UK is one of the more subtle among the global markets, particularly in comparison to the rest of Europe. Even so, more recently, tech companies have been relocating or looking to relocate to elsewhere in Europe. Depending on the economic circumstances surrounding the UK’s exit from the EU, we could see this process being reversed, or massively increased. The economic fate of the UK could drive the companies with the funding to relocate out of the UK for good, or attract more businesses and more investment, if the UK does become a tax haven for corporations, as has been speculated.
Despite all this uncertainty, it remains true that the tech bubble is currently shrinking, and has been for a while. However, to suggest that it is ‘about to burst’ is too simplistic an interpretation of a complex and relatively new, and therefore unknown, industry. There are many factors which will feed into the fate of the UK tech bubble, Brexit being one of the more significant ones. We could well be looking at a turning point for the UK tech industry, and it doesn’t necessarily have to be for the worst – after all, there is still more money flowing into new businesses now than at the start of the dotcom bubble.
Deflating or not, this is a momentous time for the tech bubble."
Subscribe to our newsletter
If you would like to receive our startup themed newsletter, full of the latest startup opportunities, events, news, stories, tips and advice, then sign up here.
Crowdfunding success for Omni, the vegan dog food brand, reaffirms the recession-proof growth of the pet nutrition industry.
Want to learn a new language? Weeve is an innovative startup that has created an innovative, creative and effective way to help you do just that.
Want to build an investable, scalable tech startup? The Raise Accelerator programme is now open for applications and will help you do just that.
Want to increase visual engagement for your startup's Instagram account? These tips will help you do just that.
Want to gain an edge over your business competitors? Listening to your audience is an absolute must.
The Clothes Doctor mission to fight fast fashion continues as the innovative eco clothing care brand raises £1m to support further growth.
If you plan on using social media to promote your brand, these simple rules will help, increasing both brand awareness and the number of consumers.
High-potential social impact startups from the UK sought for the 9th annual Les Tremplins by Voyage Privé programme.
The lowdown on Danish startup EvodiaBio and its innovative tech that produces sustainable aromas for the food and beverage industry.
Small Business Britain’s ‘How to Grow’ report outlines how small businesses are responding to economic challenges and how they can grow during recession.
Published on: 3rd August 2017
If you would like to enable commenting via your Startacus account, please enable Disqus functionality in your Account Settings.
- Vegan Dog Food Brand, Omni Smashes £400K Crowdfunding Target 1st Feb 2023 Crowdfunding success for Omni, the vegan dog food brand, reaffirms the recession-proof growth of the pet nutrition industry.
- Raise Spring Accelerator programme seeking applications for next cohort 30th Jan 2023 Want to build an investable, scalable tech startup? The Raise Accelerator programme is now open for applications and will help you do just that.
- Leading French Travel Co. Offers Mentoring to two UK startups on its prestigious two-month programme 23rd Jan 2023 High-potential social impact startups from the UK sought for the 9th annual Les Tremplins by Voyage Privé programme.
- Small businesses need new model for growth in recession 23rd Jan 2023 Small Business Britain’s ‘How to Grow’ report outlines how small businesses are responding to economic challenges and how they can grow during recession.
