Over the past month or so, I have learned from my communications with VC investors that most are concentrating on their existing portfolio. That's not to say there isn't cash ready to be put to work in newcos. While many claim to know how this economy considering the COVID-19 will play out, no one really knows. Most likely there will be a transition in the focus industries and many news sub-sectors popping up considering the new world we live. I would anticipate the M&A space picking up in the new focus sectors and sub-sectors as Just today, PitchBook posted an article, " Who shall survive, and who shall fail?". The also state, accurately, that startups usually last 12-24 months on the latest round of funding. However, this isn't "usually" times.
Sectors that have quickly become more of a focus are vegetarian and synthetic foods. While there has been a major disruption in the supply chain, expect more and more startups to enter the space. Already the use of blockchain has had a large positive impact on smart contracts, the transaction process, fraud & theft elimination, and the last mile deliver services of food, groceries, etc. Continuing on along the food theme, the agtech space investment will continue to grow. The sales of fruit and vegetable seeds have gone through the roof. Many suppliers have stopped taking orders. The growth of at home farming and or "urban farming" is another focus for investors. This includes vertical, freight container, soil-less cultivation, and urban aquaponic farming farming. Fintech has always drawn interest however with the pandemic, the industry seems to have many doubling down. A recent article from Crunchbase speaks to the continuous hiring and raising of funds.
There has never been more importance of digital readiness. As a result of Covid, there have been a number of technology trends that will be a focus for investors. These include distance earning, tele-health, 3D printing, drones, communications (mobile and hardwire), payments, security as well as remote work. Online entertainment has been affected and will be continue to be. I, for one, have watched every show on Netflix and Prime Video.
It's no doubt the Covid pandemic has been awful as people suffer across the globe. Like 9-11, it has and will alter our life and our daily practices. Some startups recognized a trend prior to the pandemic and Covid only sped up the adoption of these trends. Investors will and have recognized the opportunities in this new economy.
Todd Bertsch, an investment banker at Weild & Co., has 25+ years of initiating and delivering sustained results and effective change. Experienced strategist, entrepreneur and startup enthusiast with a passion for building businesses and challenging the status quo. Dynamic and motivated professional with a proven record of generating and building relationships. All opinions and views are his own.