From The Chair: Widening Wealth Ownership
As the Chairman of Aspremont, a company which develops businesses solving problems which are global and bringing step-change productivity improvement to their customers, this article was triggered by a colleague reminding me that in the UK the wealthiest 10% of the population owns 53% of the wealth.
With the 4th Industrial Revolution under way, there is going to be huge change for almost everyone globally over the next several decades, which will provide both significant opportunities for improving people’s lives and creating wealth, and also significant disruption to some people’s lives - a recent investor newsletter article about the impact of automation on jobs concluded with the advice ‘just own the damn robots!’.
The above reminded me of how narrowly wealth had been distributed in earlier industrial revolutions e.g. the Rockefeller family, whose wealth originated from the oil industry, and the Ford family, whose wealth originated from the automotive industry.
These huge amounts of wealth arose through starting new industries which met society’s needs - if they needed finance it would generally be provided by relatively well-off investors who became wealthier if the venture was successful - the vast majority of the population only benefited as customers of the new industry (thereby increasing the wealth of the founders and other shareholders) not as owners in any recognisable form.
We now live in a very different age from previous industrial revolutions, with significantly greater transparency. We saw in April 2019 how the Extinction Rebellion supporters could organise themselves very effectively to disrupt London for several days. My view is that if technology increasingly replaces humans and the pattern of wealth distribution follows that of previous industrial revolutions, we will face anarchy.
However, an exciting development emerging from the digital technology revolution is crowdfunding, which is effectively a modern form of stockbroking. As a result, Aspremont has proactively included working with Crowdcube as part of its fundraising process for Aspremont investee companies, for two reasons, namely:
i. it is hugely beneficial if a significant percentage of a company’s shareholders by number can be both customers and/or marketing ambassadors
ii. broadening the ownership of exciting new technology companies results in wealth being spread more evenly, which in turn trickles down to other people
When I look at the macro-economic environment today, the UK is at ‘full-employment’ and wages are finally rising - but productivity is a serious concern and the Brexit political and economic fall-out yet to be resolved. Yet, despite the macro uncertainty, at a micro-level, there are many exciting new investment opportunities emerging.
We have a wealth of talented, visionary entrepreneurs, including some of the most innovative minds in the world in Fintech, MedTech, Engineering and Technology. We have one of the most investor-friendly environments to incubate early stage companies, with generous SEIS/EIS tax incentives, IHT relief on investments in listed SMEs, and a range of significant tax credits and grants to support R&D. As a result, while at a macro level, the UK is seriously challenged, at the grass roots there are amazing companies and investment opportunities emerging.
My hope is that, as we saw with the privatisation of state-owned businesses in the UK in the 1980s, which prompted hundreds of thousands of people to buy shares for the first time (anyone remember Sid?), the combination of extraordinary new technology-driven businesses we are seeing emerging in the UK, and the access crowdfunding platforms give people to invest as little as £10, will lead to broad participation in the wealth which will undoubtedly flow from the remarkable opportunities technology is delivering to us.