Looking in my crystal ball: new economy/finance trends


Jason Purcell, ceo of FirstStage Capital, makes some predictions

Light in the tunnel for some dotcoms

Things will get worse for many dotcoms but some brands will emerge as real winners as consumer spending online continues to accelerate.

However, the bricks and mortar companies with established brands will probably reap most of the benefits, and will be able to take advantage of dotcom distress by buying at fire sale prices to help speed up their move on line.

Adoption of the mobile internet and m-commerce will accelerate

The disappointments associated with WAP have led to slow adoption of the mobile internet. However as 2.5G technologies become available in 2001, and mobile applications develop the widespread use of mobile devices will accelerate, for example as a payment device. Particular advances will be made in financial services as the banks, scenting a whiff of disintermediation, will redouble their efforts to keep ahead of this trend by providing mobile-linked services for their customers.

Broadband will fail to deliver

The failure to date of BT to reach an accommodation on ADSL will have significant reverberations. Companies whose business model is based on broadband services could fail to deliver on projections, and broadband could prove to be the WAP of 2001.

Internet will change from a static to an interactive environment

As more and more corporates XML enable their online processes we will see far reaching changes in the way that the internet is used and in business processes, as the internet moves from a static into a dynamic and interactive medium.

Business angels will make their mark

In 2001 we will see the continuing rise of tech-savvy business angels. Younger than the traditional business angel, often with money to invest from entrepreneurial success, they are now recycling skills and money into new investments and will encourage others to join the bandwagon, poor returns from April 2000 notwithstanding.

Incubators will continue to feel the pain

All the signs point to heavy consolidation in this sector. Many are already finding it impossible to obtain follow-on funding for their portfolio companies. This is a natural fall-out from the over-optimism that characterised the dotcom sector and may take some good companies along with the bad. There may be pressure from investors for incubators to be regulated in the future as another safeguard, which will further pressurise the smaller operators.

More corporates will venture

Strategically there will be a more active shift to embracing the internet as a core business driver, as corporate boards wake up to the threats and opportunities. This means more active strategic investment in on-line activities, which compete with existing operations - hence the propensity to develop start-ups and spin-outs as well as taking equity holdings without management control in small niche companies which may be useful in the future.

Storage and retrieval will become sexy

As the amount of information on the web burgeons, particularly as technology for graphics/images and speed of access improves we will see new storage materials, new storage methods for distributed computing, as well as network management tools, software for information categorisation and security systems.

Attila the Hun will become a role model for financial services companies

Competition will become even fiercer in financial services, fuelled by the changes that the internet, wireless technologies and convergence have brought. The example of Egg, where an insurance company has ventured into traditional bank territory, has been noted by all and 2001 will see a lot more aggression from the sector. One man's meat...

FirstStage Capital (www.firststagecapital.com) is a corporate finance house which specialises in securing funding for start-up and developing technology businesses. It analyses all its entrepreneurs' business proposals and identifies the best. Since the company understands its investors' needs, it can help entrepreneurs to become investor ready, then assist both sides to find a suitable match.

A single web location (www.firststagecapital.com) brings together investors, entrepreneurs and advisors. Investors can easily access pre-screened first stage companies that match their investment criteria in the form of professional investment reports. The content is personalised to their interests and constantly updated. In forum rooms, professional advisors answer questions on topical financial, legal, marketing and technology issues.

FirstStage Capital is regulated by the Securities and Futures Authority.

Further information:

Jason Purcell

Firststage Capital

020 7637 9292

Catherine Griffiths

Key Communications

020 7580 0222


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