2016 BDO Technology Risk Factor Report
01 June 2016
After an explosive six-year run-up, the technology industry has hit a speed
bump as bellwether stocks falter on disappointing earnings reports and
jittery investors. Recent tech IPOs have disappointed: 80 percent of tech
companies that debuted in 2014 or 2015 are trading below their first-day
closing price. But while the robust pace of growth of the last few years may
be gone, industry growth has not ground to a halt. The tech sector overall
has rallied after a rocky start to the year, recovering most of those early
losses. U.S. venture funds raised a record $13 billion in Q1 2016, according
to data from Dow Jones VentureWire—though both private and public
investors are exhibiting more price consciousness. And although global
M&A is down, the tech sector was a standout, totaling $100.3 billion in deal
value, the second highest first quarter on record.
Whether you choose to view the glass as half-empty or half-full, 2016 is a
turning point for the industry. According to our ninth annual Technology
RiskFactor Report, three-quarters (76 percent) of the 100 largest U.S.
public technology companies cite uncertain financial performance as a
chief risk in their annual filings—up seven percentage points from last year.
Growth is no longer a foregone conclusion, and today’s tech investor is far
savvier and more selective. Tighter purse strings mean more competition
to win limited investor dollars—and more pressure to seize the right
opportunities and avoid making mistakes.