Techxit

Apple investors can breathe a sigh of relief as the tech giant will now see its much-coveted semiconductor chips “made in America”, trading in the political instability of Taiwan and China for the scorching sun of Arizona – sort of. At an event attended by US President Biden, Apple CEO Tim Cook said the iPhone maker will buy processors from a new factory in the Grand Canyon State operated by Taiwan Semiconductor Manufacturing Company. And yet, I still can’t get an iPhone 14

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Flex your finance muscle 💸💪

Zero-based budgeting

In 1977, a former Texas Instruments account manager wrote the robustly-named ‘Zero-Base Budgeting: A Practical Management Tool for Evaluating Expenses’.

Author Peter A Pyhrr, apparently not content with spending his early days making calculators (he was 27 when he cooked up zero-based budgeting), chose instead to make the lives of generations of finance bods’ a living hell.

Zero-based budgeting holds that all expenses for a given accounting period must be justified – rather than simply being based on past spending. The ‘zero base’ refers to where you start from. You can then decide where to spend.

For cash-strapped and venture-backed businesses, zero-based budgeting has become the standard, ensuring a focus on ROI and a culture of cost management.

Let’s suppose you run a dessert factory. You buy in a basic cookie dough premade, using it as the base for several products. Over the past few years, the cost of that dough has increased 7% each year. You’ve increased the budget for it, in line with that consistent increase – which you’ve based on the year before, and the year before that.

With zero-based budgeting, rather than accept a predicted increase, based on past accounts, you’d start with a blank sheet and build out costs – with justification.

So it would then become pertinent that last year, with a growing and thriving business, you expanded the in-house baking team and started mixing some cakes and tray-bakes from scratch. A choice is now unmasked: justify outsourcing, or bring it in-house.

Working like this might seem dead obvious. But zero-based budgeting is more involved, with each budget having, essentially, to be rewritten for each new financial period. So, the cost of the process itself has to be weighed up alongside the savings it can bring.

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Another blow to Europe: Techxit

We’re not ones for sensational headlines or scary numbers, but some of the figures coming out of the European tech scene are not pretty.

According to Atomico’s annual State of European Tech report, the continent’s tech industry lost over $400bn in value up to December this year, valued at roughly $2.7tn – down from $3.1tn in late 2021.

Now, you don’t need to be Nostradamus to understand that tough times abound – globally. In the US, cutbacks and layoffs across tech have been rife – and led by the biggest players like Stripe, Meta, and Twitter. The other side of the pond, the continent’s unicorn darlings – like Klarna, Cazoo and Wayflyer – have been doing the same, along with numerous other firms.

And to add insult to very-expensive injury, startups in Europe can’t catch a break, raising $15bn less than the same period in 2021, at $85bn. This comes off the back of an obvious pullback on the sky-high valuations many of these companies received during the early stages of the Covid-19 pandemic, followed by free-flow spending to match growth, which then ground to a halt in 2022. Pile on to this a post-pandemic recession, freefalling economy, and a war in Ukraine, and you’ve got yourself a stinking pile of highly-taxed French cheese.

And 2023 doesn’t look much better. But we’ll let the clever folks over at Atomico take you through that

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Off-balance sheet items

We gave ChatGPT a go today to ask if it could pitch itself to you, and here’s what it came up with:

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How modest… You should give it a go!

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