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Software & The Internet

Investment Director Dr Alistair Forbes leads this sector, bringing to the role extensive experience from the software industry. Mercia has a specialist interest in investing in businesses which operate in artificial intelligence (AI), cyber security, software as a service (SaaS), analytical tools and adtech.

The Software & the Internet sector remains one of the most active for Mercia across both the managed funds and direct investments.

Spending on information technology is projected to continue to grow across enterprises, small and medium-sized business sectors, driving growth opportunities for software companies in multiple sectors. Mercia continues to pursue a focused strategy within this sector, targeting those areas with the highest growth rates and strong exit valuation multiples.

Cybersecurity has been and continues to be a focus area for Mercia - it is one of the most active sectors in the market, reflecting the ever-increasing scale and complexity of the cyber threat landscape. The market is expected to grow from $84.0billion in 2015 to $130.0billion by 2021. The Group’s direct investment in Intechnica targets this sector and there are a number of investments through the managed funds that offer future potential in this area.

Business to business (B2B) software as a service (SaaS) companies have been one of the most active categories in the software industry over the last few years and many companies in this sector have been able to deliver rapid revenue growth and achieve exits with strong returns to investors. Publicly quoted cloud software businesses in the US have outperformed the NASDAQ and Standard & Poor’s indices by a factor of four to five times in the last seven years.

Data analytics and the application of artificial intelligence and machine learning have attracted large amounts of investment in recent years and market size estimates suggest that in the artificial intelligence area alone, the market will grow from $4.0billion in 2018 to $34.0billion in 2023. Mercia has investments in this segment through its managed funds and is actively engaged with some of the leading research groups in this area through its extensive network of university partnerships. While this market is still in the relatively early stages of development, we expect to see excellent future opportunities for value creation.

Some emerging technologies, such as blockchain and quantum computing, are likely to be growth areas in the future but there are very few commercial applications for these at present. We continue to monitor these and other disruptive technologies and expect that investable propositions will emerge in the next two to three years from Mercia’s proprietary funds funnel.

If your business operates in one of these sectors or you are looking for investment, then please do get in touch with the team today by completing this form.

If you would like to see more information about companies in this sector, then visit our portfolio page.

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