Beringea’s Global Investment Team Looks Ahead in New Year
After a year of disruption and transformation, here are our predictions for 2021
Running a rapidly scaling business is challenging in the best of times, and few would dare label 2020 the “best of times”. Investing in leaders who can make decisions quickly and strategically adapt when needed was never more important than it was this year, when the COVID-19 pandemic so dramatically contracted markets and closed opportunities.
The exceptional management teams leading our Beringea global portfolio of businesses shaped strategies to guide their companies through this tremendous economic challenge, some even accelerating the development of new products or services to better serve those disrupted by the pandemic.
Staying closely connected to the many entrepreneurs and partners in our growth capital portfolio, to ensure everyone was safe and managing the unusual circumstances of 2020 well, was the priority this year. We’re continually grateful for the brilliant and compassionate entrepreneurs we support, whose care for their employees, customers and investors has never been more evident.
As we look toward 2021, we see the pandemic shifting from a significant disruptor to a significant catalyst for accelerated change in sectors like healthcare, remote presence, infection control, and domestic supply chains.
In the Midwest U.S. particularly, we believe the advantage of capital efficient business models will be a continued boon to growth stage companies. Here are some other trends our global investment teams expect to see, both in the U.S. and U.K.:
The battle for the “front door” of healthcare heats up
Michael Gross, Managing Director
This showdown has been approaching for years, and digital adoption cycles accelerated during the pandemic as many consumers were finally forced to digitally engage with the healthcare system. Consumers realized that they had options, and that those options were efficient and convenient.
Look for a protracted fight for patient mind share among traditional healthcare providers, health plans, digital and telehealth players, retail bricks and mortar entrants seeking to dramatically expand care delivery reach, and tech behemoths expanding healthcare capabilities. Mergers and acquisitions activity will continue to accelerate as these models converge, and players seek to increasingly guide and gain share of the re-invented patient journey.
Flexible, distributed, nomadic: the post-pandemic workforce makes its mark
Eyal Malinger, Investment Director
The work-from-home genie is now out of the bottle and there’s no going back. This will have a dramatic impact upon the look and feel of cities around the world, while businesses will also be forced to adapt to the demands of a flexible, nomadic workforce. Even with a successful global rollout of vaccine programs, the workplace will not return to the pre-pandemic status quo. I expect the average employee to ask to work from home for one or two days a week. With 20–40 per cent of the working population working from home on any given day, cities will be transformed, and the transport, real estate, retail and entertainment industries will be forced to adapt.
This trend will also enable the rise of nomadic workforces spanning multiple geographies. The idea of becoming a ‘digital nomad’ had already taken hold before 2020, with people choosing to work from Thailand, Portugal, or simply the countryside. The pandemic has placed barriers upon travel, but I can only see a boom in nomadic working — so what tools will these nomads require, and how will businesses harness this workforce?
Last, we must remember: ‘if you can do your job from anywhere, someone from anywhere can do your job.’ As a result, I expect to see every business looking at the opportunity to tap into talent pools around the world. This will require new modes of collaboration and working together that go far beyond Zoom calls.
Renewed focus on domestic supply chains
William Blake, Vice President
Disruption caused by the COVID-19 pandemic has placed emphasis on the value of insourcing and building domestic supply chains across all industries. Expect this trend to be further embraced in 2021 as speed and certainty of fulfilment will be increasingly important supply chain factors, and cost reductions will be enabled via new materials and technology driving operating efficiencies versus outsourcing to geographies with low-cost workforces. Long-empty industrial centers in the American Midwest particularly may see renewed attention and investment as the infrastructure to support a new U.S. supply chain ramps up quickly.
The war on waste takes hold
Mark Shepherd, Investment Manager
The pandemic has been rocket-fuel for online retail. Bolstered by a year of lockdowns and social distancing, e-commerce accounted for 31.4 percent of retail by November 2020, a year-on-year growth of almost 75 percent. The boom in e-commerce has, however, come at a cost.
Even before the pandemic, the waste associated with online retail was becoming a global concern. In early 2020, it was estimated the packaging of home-delivered products accounted for 30 percent of solid waste generated in the U.S. annually, and the cardboard alone costs 1 billion trees.
This systemic waste creates both an urgent challenge and a vast opportunity, and I expect this will be a year for innovation in the war on waste. Whether software companies creating new ways to analyze and optimize supply chains through to hardware businesses developing alternative packaging and transport, 2021 will see cleantech rise to the top of the agenda.
Beyond peak meat: veganism builds further momentum
Luke Edis, Investment Associate
The OECD estimated that 2020 would be the year when the U.S. reached ‘peak meat’ and per capita consumption of meat would plateau. The pandemic assisted concerns relating to health, the environment and sustainability to ensure that meat is no longer on the menu for consumers in developed economies. Meat alternatives have already grown into a $21 billion industry, according to Euromonitor.
The burger was the test-case for plant-based substitutes: West Coast upstarts such as Impossible Foods and Beyond Meat brought meat-free burgers to fast-food chains and dining room tables around the world, while global giants such as Unilever and Nestlé have also established a substantial presence in this growing market.
However, as we move beyond peak meat, there remain plenty of opportunities to build on the early successes of plant-based burgers. This year, I expect to see a growth in specialist products, niche food delivery services, and dedicated vegan-only restaurant chains.
A mental health crisis requires a range of solutions
Carrie Babcock, Investment Manager
I learned recently that a global corporate in London has 23 different providers of mental health services for their employees. I assume that ranges from mental health hotlines in a crisis to corporate subscriptions to wellbeing and mindfulness apps such as Calm, Unmind or Headspace.
As a consumer, I’ve often remained frustrated by the myriad of wellness and betterment apps that I cobble together — and often abandon — in an attempt to improve my mindset, weight, and sleep. The complexity of picking individual products and services to tackle specific problems ensures that many fall by the wayside. 2020, however, has put us beyond wellness concerns.
We are in the midst of a mental health crisis driven by the turbulence of a global pandemic, the upheaval of remote working and the uncertainty of prolonged lockdowns. There is, therefore, a clear need for start-ups to provide employers with a platform of solutions that drive long-term engagement and tackle the diverse and highly personal challenges of mental health.
I expect to see a rise in holistic platforms that supply clinical-level resources alongside a host of supporting tools from coaches to exercise to nutrition advice, making corporate health and wellness programmes an industry to watch in 2021.
“Silver surfers” could be the market opportunity of 2021
Emma Biasiolo, Investment Associate
After a trying twelve months, one of the bright spots in the world of the pandemic has been the widespread use of digital solutions to enable us to remain connected, active, and productive. In particular, older generations have adopted technology at an unexpected pace. Lockdowns have motivated many digital newcomers to embrace online products and services later in life — and it is likely that this behavior is here to stay.
‘Silver surfers’ — Internet users over the age of 50 — are a demographic that has traditionally been underserved by start-ups. And yet, they offer a growing market — about 10,000 Americans turn 65 each day — and the UK Office for National Statistics estimates that retired households have more disposable income than working age consumers.
E-commerce platforms that have enabled older customers to seamlessly transition from physical to digital services have, therefore, benefitted significantly — and this growth will stick. Beyond e-commerce, the ‘silver surfers’ could provide a market opportunity for digital healthcare, fitness and wellbeing, and fintech.
To hear more about how we invest and how we work with companies to harness trends in technology and innovation, please contact us in the UK at info@beringea.co.uk, in the U.S. at info@beringea.com, or visit our website.
