Rob Seldon, technology partner at Deloitte in the North East offers his views on Facebook’s multi-billion dollar IPO.
North East technology firms can benefit from Facebook’s multi-billion dollar IPO (initial public offering) but as the problems Mark Zuckerberg’s company has had since it went public prove, firms need to think carefully about how they raise funds.
Facebook became the biggest ever technology IPO but has been hit by negative headlines recently, with the share price dropping over 10 per cent, following its debut on the NASDAQ stock exchange.
But despite the setback, the publicity around the launch could provide North East technology firms with a boost. Whenever you get a major event like this it awakens new interest in the sector, in part because the research that’s published in the run up to an IPO encourages companies and investors to take a fresh look at what opportunities are available.
But technology firms looking to attract investment should think carefully about how they raise money and crucially, how it fits with their longer term business plans.
For some companies a venture capital or private equity route will deliver the best returns, especially if they can find an experienced investor who has the connections that can add value to their firm. For others, partnering with a larger organisation with access to greater resources is a more appropriate route.
Start-ups looking for an investor should consider that any deal is about more than just an injection of capital, successful partners will be able to open up access to new markets, which can have a transformative effect on the prospects of an early stage business.
And while it isn’t right for all companies, a public listing goes beyond raising money on day one. By going public, you secure access to a future funding route that may be essential to realise a growth strategy, whether that’s making opportunistic purchases or leading consolidation in your sector through acquisitions.
Technology firms operate in a dynamic market place and firms need to move quickly, as there may only be a limited window in which to seize an opportunity. Ensuring you’ve got the right partner and a long term vision for the business gives you the best possible chance of success.