But this focus on technology was relaxed to encompass global equities as it became clear that technology was being integrated in businesses across many sectors, Rick Steele, the boutique’s CEO and former head of BT Asset Management, says. “Now technology impacts almost every listed company. The aerospace, medicine, retail and health care sectors are now mostly driven by technology,” Steele says. “The new global giants in the index are IBM, Google, Cisco.” Within the IT sector, the area of innovation has changed to prioritise ideas over scale, Davis says. New concepts for products and software are most profitable, because the requirements for capital and infrastructure are trivial compared to hardware and distribution. “Look at Facebook, Twitter, Skype: they were created by a handful of people with assets in the tens of thousands,” he says.

“All the conventional stuff – the cheap distribution, storage – is now at a scale where the rate of innovation has slowed, and it’s now a question of refinement.” Identifying these types of industrywide changes drives the Intercept fund’s investment decisions. To arrive at these views, the team prefers not to use mediated information from brokers, company representatives or management – who have an incentive to please – but from information gathered first-hand. To gather inside information, Davis attends industry trade shows, and networks among business leaders and entrepreneurs at high-profile corporate events. The emphasis on change led Davis to concentrate on pharmaceuticals in the late 1990s: “It was clear to us that it was going to be a 20-year story, and be as productive an area as IT.”

Now TechInvest is pursuing an additional theme, not in the growth of a new industry, but of two massively populated countries. “It’s the same deal with China and India. There is a slump, they will stagger for a number of years, but they will be huge in the next five-to-20 years,” Davis says. The basis of his view can be traced to the early 1980s. Working in California’s Silicon Valley, Davis thought that in coming decades, the Asia-Pacific region would produce better investment opportunities than the US. Now he is planning to spend 2010 in India and China to gain an insight into how local corporations and entrepreneurs think about capital, risk and business decisions.

At some point beyond the global downturn, Davis says, India and China will generate their own breed of consumers and learn to not depend on export sales to the West. This will require domestic technological innovation, independent of Silicon Valley. “The consumer economies in these countries are still in nascent stages,” he says. “They will have to create their own internal demand, produced by their economies specifically for their consumption. In this, California won’t be that useful. “They have the capital to do it, but they’ve been living off exporting surplus production to the West and haven’t yet resigned themselves to the fact that those days are over.” Davis will draw on contacts in business, academia and the media to find innovative companies and detect research themes, and maintain contacts for the years ahead.