The Benefits of Tech Partnerships – How CapEX Can Help Startups
Brexit’s Inflation Knock-on To The Uk Tech Industry
Brexit has hit the pound hard, and with it wobbling industries such as tech in the process. It’s easy to feel that, as a Briton, everywhere else in the Western world is a little bit better off in terms of jobs and business opportunity than the UK right now.
With inflation squeezing our pockets, uncertainty all around us and an upcoming general election, the end of austerity certainly doesn’t seem in sight. In this post, we’ll be looking at the business model behind an opportunity for UK tech startups that we mentioned in this post about Datajar, a fellow Brighton tech business.
Capital Expenditure vs Operational Expenditure
Capital Expenditure (CapEx) and Operational Expenditure (OpEx) represent two basic categories of business expenditure.
CapEx is defined as the funds that a business uses to purchase major goods, services, property, hardware, software, vehicles and so on. Basically, anything that’s used for furthering the business to generate profits.
OpEx is slightly different, resulting from the continued costs of a company to keep its basic business functions running.
Sounds like i’m re-hashing the fundamental basics of A-Level Business Studies right? Bear with me a hot minute though.
Meet James Ridsdale?—?Director & Senior Systems Engineer at DataJARltd
In this video, DataJar CEO James Ridsdale talks about the importance of having a tech partner that has made OpEx feasible. James describes the importance of his relationship with us, Cloudhelix, as a tech partner. The main part of this deal is build around the idea of CapEx vs OpEx.
Almost anyone, everywhere involved in business, doing pretty much anything, wants payment for whatever they are providing. So what do you do, as a startup with a groundbreaking idea, without capital expenditure on your side or a steady stream of revenue, how are you expected to get going at the scale and speed needed?
A consideration is to approach a firm about a mutual OpEX tech partnership, where OpEx can be utilised in order to float the success of your product or idea utilising a pay as you sell revenue sharing agreement.
If the startup is making money and the proof of concept is clear and viably working, the initial investment can begin small via OpEx that allows ideas and products to be scaled to meet the demands of larger clients.
Technically, it makes the biggest clients a little more viable than you’d expect for an IT startup at that time with minimum cash assets.
Setting up an OpEx tech partnership in this way also helps majorly in avoiding LOCK IN where by a big provider would usually pin you to the ground once any agreement has been made with them, and keeping your capital assets flexible.
To put this in an IT context, a startup that secures a hybrid hosting partnership with a provider, with the full amount of the hosting paid once the business concept is proved and revenue is coming, can claim back the full initial outlay under OpEx. This allows the startup to take on another client, scale with their provider, take another client, scale… and so on and so forth.
This is an OpEX Tech Partnership at its prime utilising revnue sharing in a way that allows maximum scale.
In Conclusion On Tax Optimised Tech Partnerships
So many businesses–startups especially–avoid a fully digital infrastructure because of the initial outlay involved, but doing so seriously pays dividends in the future.
Hosting, data security, an optimised hybrid cloud ecosystem making the best strategic mix of private and public cloud infrastructure, tech support and full scalability at short notice, all available via a lease that’s completely tax deductible.
It puts budding young startups in a completely different position.
How could OpEx help your startup get ahead, scale and gain clients or partners that currently feel out of reach?
As a cloud provider, we’re happy to work in OpEX tech partnerships with brilliant businesses held back by the early days nature of their business.
Let’s grow together, not fail alone. Get in touch with us to have a chat about we can help with you.
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