Big companies pull back on investment – great news for startups

US groups rein in capex

Reading this front page of the Financial Times this morning made me feel great about the future for startups. Innovation is happening faster and faster yet big groups are reining in capex and distributing $1tn to shareholders in the US alone. The only way to read this is as a tacit admission that they can no longer live with the pace of change. Moreover, even when the management of these companies get it they are often hamstrung by shareholders who are overly focused on the short term.

Startups will benefit in two ways:

  • More opportunities to disrupt big groups and build massive new businesses
  • More M&A as companies replace internal innovation with acquisitions – this will run from acqui-hires up to multi-billion dollar deals

Exciting times!