Blog Post
Tech Talk with Omar - July 2020 update
August 6, 2020
Much of the news this month was dominated by what will become of the US’ big Tech giants.
We may not hear any updates on this until November but we’ll certainly be keeping a close eye on this one as early suggestions claim that the move will pave the way for smaller Tech firms to compete against the likes of Apple, Facebook etc.
In other news...
- Global expansion may sound daunting and is often flagged as ‘high risk’, and indeed there are a multitude of factors involved, from hiring new teams to meeting local tax laws. Fivetran, a data integration startup has now closed $100m Series C to accelerate their global expansion. $100m seems like a lot of money and as such, other startups may fear this as a barrier to enter new markets. Each startup is unique and some would require more funding than others to scale up their operations. Data analytics/ metrics plays an important part in the decision making process.
- A question I am often asked is ‘why do you need offices in different countries if a tech startup can do everything remotely’? Whilst you can provide services online, its also critical to invest in building an in-country sales/ marketing team to increase your local presence.
- I feel it’s the right decision for SAP to spin out their $8bn acquisition Qualtrics to support their fast growth. This is very common amongst large companies; restructuring their high growth brand to avoid government scrutiny, the likes of which we have seen some of the biggest tech companies currently facing. SAP remains a market leader in large retail and manufacturing companies, whereas Netsuite appears to be increasingly popular amongst software companies. To me, UX is much more important than some of the bigger brands and SAP still seem behind on this - their implementation process can be somewhat long winded.
- Xero is a great accounting software for tech startups but if you have high volume transactions (especially SaaS business models) their API limitation can be very challenging. We can redesign your finance process and implement a scalable solution to support the growth rate.
- It is shocking to see how many
redundancies have already been confirmed by some of the big players in the UK. I worked for one of these companies and I understand from experience how difficult it is to make a role redundant, particularly when I know how my family depends on my income. I learned the hard way that when you grow your startup; don’t just keep hiring people because you have investors’ money to burn, think if the role you are creating is sustainable in the long term or whether it is just a temporary position until you can look to automate the tasks in the future (a very common problem for startups).
In the realm of employee share schemes, understanding the tax implications is crucial for both employers and employees. One significant aspect to consider is the Section 431 election, a provision under the UK's Income Tax (Earnings and Pensions) Act 2003. This election plays a pivotal role in determining how employment-related securities, particularly restricted shares, are taxed.
In today's rapidly evolving business environment, intangible assets have become central to a company's value and growth potential. Traditional accounting standards, however, have struggled to keep pace with the diverse and complex nature of these assets. Recognising this gap, the International Accounting Standards Board (IASB) and the UK Endorsement Board (UKEB) are embarking on a comprehensive review of IAS 38: Intangible Assets, a standard that has remained largely unchanged for over 26 years.
The UK government has been generous in supporting research and development (R&D) through tax relief schemes. However, with increased scrutiny from HMRC, many businesses are seeing their claims rejected, even after initial approval.
