SMEs prove fertile testing ground for technology

In 1517, Martin Luther had a radical idea and courage. His investigation of the scriptures led him to reject outright that salvation could be purchased. His stand against the Catholic Church initiated the Protestant Reformation. He became an outlaw.

But Luther's ideas would have gotten nowhere if Gutenberg, decades earlier, had not invented the mechanical printing press. Gutenberg's Bible and Luther's subversive ideas changed the course of Western civilisation.

Behind every new product is an idea - an insight into consumer behaviour or a need identified - which gets proven, or not, in the market. The best product doesn't win however. The best product with the best distribution does. Again, Luther without Gutenberg would have been a mere footnote.

Slicethepie, a financing engine for unsigned artists, received £1m of investment in January 2009. CEO David Courtier-Dutton said: "We're going to get very big by staying very small." With the £1m, he cut himself a global partnership deal with Bebo giving them profound distribution of their product. He didn't need to raise capital to build distribution; his novel product enabled him to be the partner of choice for Bebo.

Carlotta Perez, a Venezuelan economist, argues in her book, Technological Revolutions and Financial Capital:  The Dynamics of Bubbles and Golden Ages, that each revolution has a double nature: first, explosive growth; the second, modernisation and rejuvenation of the mature industries.

So technology explodes into the market and is somewhat deployed but then a second opportunity - "the golden age" - arrives where the technology is fully exploited throughout the society which surrounds it. So cars in 1912 would beget roads, suburban development, and malls.

So while technology is the driver of economic growth, how society embraces it determines the benefits which are received. Each revolutionary cycle takes 50 to 60 years.

The new communications technologies in particular are spawning not just new industries such as mobile banking and voice communications, but leveling the playing field with the SME. The rise of the SME is how society is embedding new technologies into our daily life. Previously, the SME was at a disadvantage vis-a-vis its corporate competitor. No longer - they are becoming sophisticated, and in turn, offering distribution power to new products.

Companies like Transglobal Payment Solutions enable the FD of a SME to have international payment and treasury capabilities that only corporates would have had.

Watch for a whole host of new services targeting the SME, and companies such as Sage, who have historically serviced SMEs well, will have an unfair advantage.

Julie Meyer is the CEO of Ariadne Capital and the founder of Entrepreneur Country. Slicethepie is a portfolio company of Ariadne.

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