TechCentralTechCentral
    Facebook Twitter YouTube LinkedIn
    Facebook Twitter LinkedIn YouTube
    TechCentral TechCentral
    NEWSLETTER
    • News

      Unlawful Eskom strike costing South Africa three stages of load shedding

      1 July 2022

      Google.co.za is down and the domain is pending deletion

      1 July 2022

      US files charges over South African bitcoin fraud scheme

      1 July 2022

      Hein Engelbrecht to lead Mustek as its new CEO

      1 July 2022

      Alviva shares leap higher on R3-billion take-private offer

      30 June 2022
    • World

      Meta girds for ‘fierce’ headwinds

      1 July 2022

      Graphics card prices plummet as crypto demand dries up

      30 June 2022

      Bitcoin just had its worst quarter in a decade

      30 June 2022

      Samsung beats TSMC to 3nm chip production

      30 June 2022

      Napster plots crypto comeback

      29 June 2022
    • In-depth

      The NFT party is over

      30 June 2022

      The great crypto crash: the fallout, and what happens next

      22 June 2022

      Goodbye, Internet Explorer – you really won’t be missed

      19 June 2022

      Oracle’s database dominance threatened by rise of cloud-first rivals

      13 June 2022

      Everything Apple announced at WWDC – in less than 500 words

      7 June 2022
    • Podcasts

      How your organisation can triage its information security risk

      22 June 2022

      Everything PC S01E06 – ‘Apple Silicon’

      15 June 2022

      The youth might just save us

      15 June 2022

      Everything PC S01E05 – ‘Nvidia: The Green Goblin’

      8 June 2022

      Everything PC S01E04 – ‘The story of Intel – part 2’

      1 June 2022
    • Opinion

      Has South Africa’s advertising industry lost its way?

      21 June 2022

      Rob Lith: What Icasa’s spectrum auction means for SA companies

      13 June 2022

      A proposed solution to crypto’s stablecoin problem

      19 May 2022

      From spectrum to roads, why fixing SA’s problems is an uphill battle

      19 April 2022

      How AI is being deployed in the fight against cybercriminals

      8 April 2022
    • Company Hubs
      • 1-grid
      • Altron Document Solutions
      • Amplitude
      • Atvance Intellect
      • Axiz
      • BOATech
      • CallMiner
      • Digital Generation
      • E4
      • ESET
      • Euphoria Telecom
      • IBM
      • Kyocera Document Solutions
      • Microsoft
      • Nutanix
      • One Trust
      • Pinnacle
      • Skybox Security
      • SkyWire
      • Tarsus on Demand
      • Videri Digital
      • Zendesk
    • Sections
      • Banking
      • Broadcasting and Media
      • Cloud computing
      • Consumer electronics
      • Cryptocurrencies
      • Education and skills
      • Energy
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Motoring and transport
      • Public sector
      • Science
      • Social media
      • Talent and leadership
      • Telecoms
    • Advertise
    TechCentralTechCentral
    Home»Opinion»Alistair Fairweather»The biggest tech company you’ve never heard of

    The biggest tech company you’ve never heard of

    Alistair Fairweather By Alistair Fairweather27 April 2016
    Facebook Twitter LinkedIn WhatsApp Telegram Email

    alistair-fairweather-180On Monday, Ant Financial Services Group received US$4,5bn in private funding. That sets the Chinese firm’s value at roughly $60bn. It’s the largest funding round for an Internet company in history.

    Let’s put that number into perspective: Google’s initial public offering in 2004 netted $1,6bn and valued the company at $23bn. Ant Financial just received more than twice the $2bn funding Uber raised in January this year (coincidentally also from Chinese investors).

    This makes Ant Financial the third largest privately held technology company on the planet after Uber ($62,5bn) and Xiaomi ($46bn).

    That may seem absurd, but the company handles online payments for over 450m customers. In November last year, its flagship brand, Alipay, handled $14,3bn in sales in a single day.

    A decade ago, a company would have needed an IPO to access billions of dollars in capital, but the market has undergone a fundamental shift since then. There are many factors behind the shift but three stand out: appetite for risk, long-term orientation and regulation.

    With interest rates stuck at historic lows and global growth looking anaemic, there is a lot cash sloshing around the global economy seeking better returns. Stock markets are generally overtraded, and so private capital is increasingly tolerant of risk.

    This wave of money hit Silicon Valley in 2014 and 2015. More than $100bn flowed into tech start-ups over that period. Funding has since slowed to a more sensible pace in the US, but Chinese investors are clearly still eager to take on risk.

    This funding firehose is convenient for start-ups because their founders are increasingly wary of going public. Once a share is publicly listed, investors tend to obsess about their returns and thus put incredible pressure on the company to chase quarterly earnings targets.

    This short-termism can undermine a company’s plans for long-term growth. By staying private, a firm is shielded from the pitiless gaze of the markets and can continue to focus on growth and innovation rather than profits.

    Private investments also offer other benefits to both sides of the deal. Regulation is generally much lighter than formal markets, which are currently under intense scrutiny thanks to their systemic corruption and failure during the Great Recession.

    ant-financial-services-640

    But while the numbers are impressive, there is a dark side to this trend. Ordinary people do not have easy access to these private markets — they are almost exclusively the preserve of the ultra-wealthy, large nation states (technically these are sovereign wealth funds) and large banks.

    This means that ordinary investors cannot invest in a company until it is already incredibly large. This greatly reduces possible returns. The chances of a $100bn company with 25% of a global market doubling after its listing is a lot lower than if it were to list at a value of $25bn.

    Of course, the founders of public companies are under no obligation to include the rest of us in their good fortune. Many large companies never go public. But with global income inequality increasing at an alarming rate, concentrating technology wealth in the hands of the few is not going to improve matters.

    We’re living in the early stages of a new industrial revolution. As artificial intelligence and robotics enter the mainstream, the world will face enormous disruptions to skilled labour markets.

    The obvious answer, at least for entrepreneurs, is to get out there and start a modern company unburdened by the legacy of the 20th century that persists in so many global companies. There’s plenty of funding out there, after all. All you need is a good idea and the will to implement that idea.

    It’s not that simple for many people. Without 21st century skills or access to capital, many currently middle-class people are going to suffer over the next two decades. We can already see the iceberg ahead. Either we need to turn the ship, or we need to make for the lifeboats. Time to choose.

    • Related: Unicorns are on the endangered list
    Alistair Fairweather Ant Financial Ant Financial Services Ant Financial Services Group Google Uber Xiaomi
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email
    Previous ArticleLG G5: great phone, but modularity a gimmick
    Next Article Post Office near to R2,7bn capital raising

    Related Posts

    Google.co.za is down and the domain is pending deletion

    1 July 2022

    Google Cloud customers will learn their Gmail carbon footprint

    28 June 2022

    Apple, Android phones hacked by Italian spyware

    24 June 2022
    Add A Comment

    Comments are closed.

    Promoted

    Billetterie simplifies interactions between law firms and clients

    30 June 2022

    Think herding cats is tricky? Try herding a cloud

    29 June 2022

    How your business can help hybrid workers effectively

    28 June 2022
    Opinion

    Has South Africa’s advertising industry lost its way?

    21 June 2022

    Rob Lith: What Icasa’s spectrum auction means for SA companies

    13 June 2022

    A proposed solution to crypto’s stablecoin problem

    19 May 2022

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2022 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.