Investment Opportunities in the “New Norm”

It is now obvious that COVID has deeply affected our lives and that we must evolve into a “new norm”. However, as with any change, VCs and investors carrying smart investments can turn this adversity into an advantage.

The SARS outbreak of 2003 gave rise to e-commerce giants such as Alibaba and JD.com, while companies such as American Express and Starbucks pivoted during the global financial crisis of 2008−2009 to digital operating models that enabled them to increase shareholder value. COVID-19 is likely to be no different from other crises; it will accelerate several trends that were already well underway and will act as the judge, jury and executioner of declining industries.

I have created a series of posts where I’ll dive into the foreseeable opportunities this epidemic may cause. These thoughts not only focus on the #energyfuture Launchpad is building, but also dive into efficiency opportunities, areas of high growth and investments that will create a lasting impact. These topics are just my vision, which may change over time, and are not intended as investment guidance or expert advice.

Episode 1 — The rise of virtual clinics, ghost kitchens and data as the new oil

• Startups offering Health as a Service (HaaS) will see strong market presence in the medium to long-term — pulled by changes in regulation, insurance policies and user experience.
• Take away culture will not only be adopted by chains/fast food. Startups improving efficiencies and costs on the supply chain will see sharp valuation increases.
• Big data will dominate our lives, to an even greater extreme, under the promise of health through surveillance. Industry dodges the bullet by focusing on ROI and efficiencies.

On Retail Health & Wellness Tech — Apps and connectivity steering our wellbeing

As hospitals collapsed, governments and insurers have decrease telehealth restrictions allowing patients more flexibility and convenience in how they manage personal care. With a wide-ranging suite of B2C offerings — including preventive and monitoring tools for consumers, dietary supplements and products that enable the “healthcare at home” movement — the volume of virtual visits has nearly doubled across the industry. This crisis has only catalysed long-term growth in telehealth, with companies like 98point6, Amwell and Ro showing strong traction through H1 2020.

The rise of tech has also supported the adoption of remote monitoring devices and use of robotics in hospital treatments. The use of Data-as-a-Service (DaaS) platforms can ensure outbreaks like COVID-19 are recognized early and treated effectively. Wearable sensor feed information by monitoring a patient’s respiratory rate, heart rate, and skin temperature, as well as the frequency of their coughing, sneezing and vomiting. Telemedical robots have started to be applied to treat highly infectious cases. These fast changes in regulation and trials suggests there is potential to streamline basic diagnostics in the long-term.

With the pandemic governing media coverage and feeding panic, mental health startups have experienced an increase in used hours of 30%. Corporates are seeking bundling mental health support to existing employee benefit packages — with Headspace experienced 100% increase in corporate clients and double the average amount of daily new members.

Following this trend, is the growth of at-home fitness apps and devices. With gyms shut, individuals have been forced to transition to home workouts. Peloton’s stock has outperformed investors’ forecasts and many fitness apps are offering free trials or public workouts. Whilst this doesn’t generate revenue it results in long-term customers and customer stickiness. At home workouts have also resulted in a rise in yoga mats and kettlebell/dumbbell sales — though this is likely to have been a one of chance to capitalise.

On Foodtech — Fresh product shopping from the sofa

Following restaurant closures and consumers quarantining, this is the moment for any startups changing the way food is discovered, purchased, delivered and consumed. Demand for grocery and food delivery services has placed startups like Glovo, Instacart, DoorDash and Deliveroo in the spotlight of investors. Despite growth being pushed by COVID, the food delivery ecosystem will expand into faster, more capable and efficient technologies as customers’ appetite for delivery increases.

With delivery providers rising, lies the idea of ghost kitchens. To date, this model has mainly been used strategically to keep restaurants afloat, however has raised a solution to most of the pressing problems in this industry — cost of real estate, staff requirements and limited customer rotations per night. Restaurants may start taking more of a long-term strategic view of ghost kitchens, increasing demand for Kitchen as a Service (KaaS) models.

Online grocery services have seen massive growth rates throughout this crisis — Farmstead reported 70% growth rates — with shortages of food and late deliveries not being enough to deter demand. As consumers start trading physical food presence for delivery comfort, large providers are set to see extended customer stickiness. Despite this being a settled market space, there are plenty of opportunities for startups improving efficiencies and speed on grocery supply chains.

Kitchentech, an area that has shown attraction around the most tech savvy, has not benefitted from the current environment — as expected by its high CAPEX. However, the long-term outlook is promising with robots helping scale production and reduce labour costs in large chains or ghost kitchen chains.

On IoT — Big brother; a long-term shot against the epidemic

Before, pervasive monitoring was left only to a handful of governments. However most democratic countries have now turned to mass surveillance and phone apps to control population movement and track infected patients. This has been key to slow down community spread — which has reinforced the continued use of big data monitoring and surveillance as the new norm. Whilst these cases seem an interim measure, tight surveillance will become the new norm, presented under the promise of health through crowd monitoring. Therefore, in the medium to long-term, big data and remote monitoring/sensing startups will see increased valuations and interest.

The adoption of remote monitoring, however, will not permeate through industry — IIoT adoption will see a decrease in the short to medium-term as industries aggressively cut expenses to stay afloat. With the historical long and expensive implementation problems, combined with a high failure rate, industries will look towards high ROI — a grey zone amongst IIoT tech. Nevertheless, this brings a perfect opportunity for IIoT platforms that can act as an add-on into current stacks, resulting in cost savings through reduced employee hours and improved workforce efficiency.

With countries turning into survival mode, technology evolving around smart cities will come to an abrupt halt. These can be seen as niche technologies with solutions looking for a problem, not the other way around. These will be first to be shelved in a recession.

If you have any thoughts or feedback, share it with me here or on LinkedIn.

Nacho Salsas, Launchpad

This content is intended for informational purpose only and should not be understood as financial or investment advice. I am no expert in any of the areas listed above and cannot guarantee they will perform as stated — they are just my thoughts. I have no relationship or active investments in any company listed above.