We had the opportunity to attend Collision Conference in Toronto this year, and we wanted to share some key takeaways with you. Collision is North America’s fastest-growing tech conference which was held from June 20th to June 23rd, 2022, in the city of Toronto, Canada. The event included tech experts, some of the world’s best speakers and market leaders.
Across the board, despite a significant slowdown in funding, there is an incredible amount of innovation happening in the tech sector. DeepTech fields such as AI, AR/VR and autonomous vehicles continue to move forward pushed by new and existing startups. Corporate funds are replacing part of the slack in VC funding.
1. The Tech sector has incredible innovations coming down the pipeline, especially in the field of AI.
2. Although hardware companies were underrepresented, the ones present showed great promise and an array of future applications.
3. From an investment side, although many investors are aware of a major slowdown in funding, this is the best time to find the future winners in the DeepTech arena.
4. Building on the last point, this is a great time for early-stage investment, as many fantastic companies will emerge out of the current struggle and competition.
One of the challenges that comes with design services is the cyclical nature of the services business. When the economy tightens and corporates are watching their operational expenses, the first step will be to halt any external contracts/contractors which are not deemed absolutely essential.
Whereas the earlier (staircase) model is a good approach in scaling up revenue and creating new revenue streams, the foundation of the company is still based on the service model: headcount continues to be the main driver (typically up to 60-70% of revenue). In terms of (enterprise) valuation the additional revenue streams, however, will already make a significant difference.
Design services companies typically start small (some exceptions when it concerns management buy-outs) and natural growth is a slow process as it requires hiring and training of engineers based on/driven by the revenue stream of the company. Growth of business is tied to growing the team and it is not always easy to find the engineers.