When it comes to technology, it seems the most recognisable companies are more often than not American. Most investors can name the industries dominated by Facebook, Google, Apple, and Microsoft in an instant. In fact, emerging names like Tesla and Airbnb are also American.
Tech names from other parts of the world are quickly gaining ground. In recent years, Alibaba, Softbank, and Spotify have all managed to establish their brands as global household names. However, investors would be hard-pressed to name a British tech giant on the same scale.
Until 2016, the UK’s biggest technology company was Cambridge-based ARM Holdings. Most smartphone and tablet users still have no idea that the the technology developed by this group of engineers powers more than 85% of all mobile devices (Richard Beddard, Money Observer, February 23, 2016). Unfortunately, Softbank’s acquisition of the company in 2016 took it off the London Stock Exchange, forever depriving retail investors of the chance to bet on the growing market for Internet-of-Things (IoT) devices and robotics.
The technology stocks that remain listed on the LSE are either so niche that most investors haven’t heard of them or so small that they stand little chance against their Chinese or American rivals. However, there are some companies that have the potential to dominate their niche. The fact that British technology remains overlooked and undervalued presents an opportunity for investors willing to take a closer look.
Accesso (AIM: ACSO) is a great example of this. Currently worth half a billion pounds, this AIM-listed stock is far from a global technology giant, but its software tools power the guest experience at some of the most recognizable tourists attractions in the world, including Alton Towers and Legoland (Steven Frazer, Shares Magazine, 19 Feb 2015).
Other interesting tech stocks include gene therapy research firm Oxford Biomedica (LSE:OXB), ID verification services provider GB Group (LSE:GBG), and robotic process automation solutions provider Blue Prism (AIM:PRSM). Just Eat, the online platform that revolutionised takeaway food delivery, just entered the FTSE 100 for the first time last year. Valued at under £4 billion, JustEat (LSE:JE) is arguably Britain’s most well known tech success story (Josie Cox,Independant, 18 December 2017).
Meanwhile the UK is home to 22 out of a total of 50 European unicorns (startups worth over $1 billion) (Jonathan O’Callaghan, Alphr, 30 Apr 2018). Many of these startups are focused on emerging technologies like biotech artificial intelligence (BenevolentAI), virtual simulations (Improbable), and online food ordering (Deliveroo).
Investors trying to bet on home-grown technology could either take a closer look at underrated tech stocks or wait for these exciting unicorns to open with investors in the near future.
The value of investments and income from them may go down as well as up and you may not get back the original amount invested.