James Ashton: A few pricked bubbles won’t curb our appetite for a new wave of tech floats


Business Editor

Danny Rimer, a prime mover at the internet investment house Index Ventures, debunked a few theories when we met last summer.

One was that anyone late to the digital world had already missed the boat. The other was that British pension funds ran scared of investing in tech firms with explosive growth rates but negligible profits.

Mr Rimer, whose firm’s hits include investing in Skype, Facebook and Betfair, argued that London’s problem with technology, such as it was, had nothing to do with institutional investors that increasingly take a global view and talk across offices about which stocks to back. Rather, Mr Rimer suggested that equity research teams had failed to keep pace with the changing media scene, often expecting the same analyst to monitor Google as well as broadcasters and publishers – whereas on Wall Street a slew of teenage scribblers are carving up the internet universe.

The contraction in the breadth and quality of equity research is a subject for another column. Aside from which investors are the better informed, this week’s correction in global technology values was long overdue. It took the froth off big names like Amazon and Netflix, as well as newer entrants that have been enthusiastically received in London, including the takeaway website Just Eat and AO.com, a seller of appliances.

The bubble afforded racy valuations to companies that show a glimmer of being the next Asos or Rightmove. It was predicated on the belief that nothing could stop exponential growth stretching out for years. Those that boldly placed their bets could be right, but backing technology is nothing if not a bumpy ride. Better that investors take a portfolio approach rather than putting their faith in just one Next Big Thing.

The bigger question is whether such wobbles will poison the pool for the queue of market listings to follow. My suspicion is they won’t. Crimean tensions aside, global markets are feeling quite chipper. New issues are their lifeblood. The US isn’t going to choke off the supply of cheap money any time soon and the emerging markets sell-off is less worse than many feared.

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