A rebound in the economy could lead to the emergence of new startup companies and result in an uptick in tech-industry hiring.
Last Friday, the Commerce Department revised upward its already impressive gross domestic product growth estimate for the fourth quarter of 2009. Previously, the department said that growth was 5.7 percent on an annualized basis: The new figure is 5.9 percent – the best observed in six years.
While most experts anticipate that that red-hot growth will cool off in the coming quarters, the late-2009 GDP growth surge shows that there’s still life left in the American economy. Some startup innovators may advantage of the fact, following the tactic proscribed by Procter & Gamble chairman A.G. Lafley – who was quoted in a recent Newsweek article as saying that “that the best time to gain ground on competitors is when they are retreating.”
The tech sector is a likely breeding ground for new companies. There is a market for small tech firms, as Google demonstrates – many of the tech giant’s current offerings were conceived by smaller companies that Google bought. The company’s ad sales platform, AdSense (which gives website owners a share of ad revenue), was created by a Los Angeles company called Applied Semantics.
And, more recently, Google bought mobile ad sales firm AdMob for $750 million – one of the company’s more expensive acquisitions, but also one with the potential to be extremely lucrative. Mobile ad sales are poised to take off: Research firm Gartner said last August that the mobile ad market would grow 74 percent in 2009 and explode after 2011.
Twitter, too, will begin hosting an ad sales platform in the near future – making internet advertising a growth industry.
It’s not just rapidly expanding sectors that would benefit from a proposed jobs bill, though.
Political website The Hill reported Thursday that Senate Majority Leader Harry Reid was working on a small-business bill that would help startups in particular.
“Zeroing out capital gains taxes for budding companies has been mentioned and could gain traction,” The Hill said.
Even in the absence of aid bills and government stimulus programs – which are expected to be wound down this year – private investors may be stepping in to promote startup incubation.
Last week, tech titan Intel reported that it would partner with 24 venture capital companies to offer $3.5 billion to tech startups over the next two years. Their partnership, called the Invest in America Alliance, will “target key innovation and growth segments such as clean technology, information technology and biotechnology.”
On top of its provision of multibillion-dollar tech-firm investments, the alliance has received commitments from 17 large corporations to hire more college graduates – “an investment,” Intel CEO Paul Otellini said, “in the country’s innovators and a signal to the global marketplace about America’s commitment to innovation and future competitiveness.”
While Sand Hill Road VC firms may be an integral part of Intel’s plan to boost tech-industry innovation, it’s not just California companies that will benefit. The Boston Business Journal reported on Friday that Boston-area companies raised an aggregate of $87 million in private funding this week.
It was, the newspaper said, “a solid investment rebound for local tech and life sciences companies after a tepid funding stretch earlier in the month.”