Is tech in trouble? There has been a lot of media buzz in recent months about rising interest rates, declining stock prices for big tech companies, and the possibility of a recession in 2023. It’s true that there are legitimate challenges in the macro environment facing investors in many industries, and some big-name companies were over-valued and are going through a necessary correction.
But if you look beyond the gloomy headlines from Wall Street and Silicon Valley, there are surprising signs of fundamental strength in the digital business space. “Main Street” and “middle market” digital businesses, such as mobile apps, revenue-generating websites, ecommerce stores, blogs, and SaaS solutions, are still showing positive momentum for big growth in 2023 and beyond.
Let’s look at a few top trends that are driving this digital business growth and discuss a few key takeaways for sales professionals.
Online Business Acquisitions are Strong
Recent survey data from the 2022 Insights Report shows that the U.S. is the world’s leading market for online business acquisitions. In fact, in 2022, U.S. acquisition of online businesses/digital assets was 5x that of the next five largest markets (Pakistan, United Kingdom, India, Canada and Australia).
Why does this matter for digital business growth? Because the same country that created Silicon Valley is also showing strong, enduring demand among buyers of smaller digital businesses to acquire. Buying an existing online business, eCommerce site, or other revenue-generating website or mobile app can be another successful path to digital entrepreneurship.
Key takeaway for sales leaders: Even if the U.S. enters a recession during 2023, even if layoffs by big U.S. tech companies continue to grow in the short term, the U.S. has a healthy ecosystem of buyers, investors, and entrepreneurs that understand the long-term potential of digital businesses. There might be consolidation happening in your market, or new players emerging that you can sell to – your next sales prospect might be an institutional investor that has acquired multiple smaller digital businesses. Even though there is turmoil in Big Tech, there are worthwhile opportunities emerging in the broader digital ecosystem.
Top Investment Area for Digital Business Acquisitions
The 2022 Insights Report also found that the most popular vertical of digital business that prospective buyers searched for was: Fitness. This is a sign that people are interested in solutions to help them lose weight, feel better, improve their exercise routines, and other health-related activities. Whether it’s losing the extra “pandemic pounds” that people gained while stuck at home, or the need to re-energize their fitness regimen to stay active during a recession, fitness-focused businesses are generally considered to be recession-proof and are a great fit for this moment in the consumer landscape.
The Fitness category is also a good fit for small digital businesses and digital assets, with many ways for acquisition entrepreneurs to add value for customers – such as fitness apps, fitness advice websites and coaching programs, fitness accessories, niche sports communities, and more. After three years of lockdowns, Work From Home, illness, sedentary living, and canceled plans, people want to feel better and improve their overall health and well-being in 2023. As people look to invest in their own health, that’s also a good sign for investors in digital businesses – and the sales teams who sell to companies in these spaces. How can you adjust your sales pitch to be a “wellness” angle? Show your buyers how your products, services and solutions are driving better wellness outcomes for their companies, and for the people that they serve.
Digital Businesses Are In-Demand Assets for Institutional Buyers
2022 was a notoriously tough year for investors, with stock and bond markets taking big losses, and with heavily hyped tech companies and entire categories of speculative assets losing half of their value or more. Institutional investors are looking for a new asset category to invest in that can deliver more predictable returns, with less volatility. The answer: digital small businesses.
Institutional investors such as Private Equity, family offices, and private companies are making a hard pivot toward online business and digital asset investments. Online businesses like content sites, eCommerce stores, and other digital assets can deliver 30% plus annualized average returns.
Key takeaway for sales leaders: Even as the media darling Big Tech companies of yesteryear are suffering drawdowns, the online digital business economy continues to make real money and open new opportunities for investors. The next big thing in tech might be a collection of smaller things – you might need to familiarize yourself with a new array of prospective buyers or key players in your industry. But there are still plenty of deals to be made.
Looking ahead to 2023, it’s important for sales professionals to keep in mind that the savvy entrepreneurs and startup founders still have a lot of room to innovate and create. Despite the disappointments and failings of Big Tech in 2022, there are still unexplored worlds of opportunity for digital business growth – especially among the smaller digital businesses that are often overlooked and underrated in the national media conversation about tech. But tomorrow’s big tech success stories might look a bit “smaller” (for now) than what we’ve seen in the media during the recent boom years.
Today’s digital entrepreneurs and investors are leading the way, by growing and investing in real businesses with predictable revenue streams and loyal customer bases – digital businesses that never got over-hyped or over-valued.