LondonVenture Capital

In Britain, online companies are growing 50x faster than the average company

By April 29, 2013 May 1st, 2013 2 Comments

CityAM reported today on research from Barclays:

Research from Barclays shows that firms that sell their products or services mostly online have seen revenues grow by on average 11.4 per cent in the last three years, over 50 times faster than GDP growth of 0.2 per cent over the period.

The research shows that the expansion is being driven mainly by small and medium-sized firms. Most high-growth businesses have fewer than 100 employees, while average revenues are £8.9m. Almost a quarter of firms – 23 per cent – are based in London, despite the capital accounting for just one-eighth of the UK’s population.

The dominant macro-economic story at the moment is one of ‘stagnation’ and ‘low growth’ which accurately reflects the headline statistics and situation at many of the world’s largest companies, but it fails to convey that there is a lot of volatility in the markets that add up to the flat headline figure. This data from Barclays illustrates the point well – average growth is flat, but UK online companies are growing at an average of 11.4%.

When we look around us this isn’t surprising. Some markets are collapsing – e.g. newspapers, much of high street retail, broadcast TV – and therefore for the headline figure to be flat some others must be growing fast – e.g. online retail.

This, of course, means that even in these difficult times there is opportunity for investors who are able to get money to work in those growth markets.

The other interesting thing about the Barclays research is that it shows much of the growth is located in small companies based in London – the sweet spot for venture capitalists.