Inside Switzerland’s Largest Innovation Think Tank
Throughout history, the surest bet for investing in the most profitable and high-growth companies would be a bet on companies with a proven ability to innovate. But say you wanted to select the world’s most innovative companies. Where would you start?
Innovation is an elusive concept and depending on your criteria you could select those companies investing most heavily in Research & Development or those filing for the greatest number of patents. While such metrics are helpful indicators, they are of limited use in identifying the companies that best translate their innovation prowess into cash flows from products and services. If and when patents and R&D investments materialize is uncertain, and both metrics vary in importance across industries and applications. They merely suggest an intention for the future.
What if one could score listed companies for their innovation revenues and create a portfolio of the highest ranking equities? With that ambition, Evelyne Pflugi and Tobias Reichmuth established Zurich-based investment-boutique The Singularity Group in 2017.
“We set out to score the global equity universe from the perspective of companies’ ability to generate revenues from innovation. The key thought process here is that innovation will command a premium price and drive superior growth, resulting in earnings surprises that move the stock price,” says CEO Pflugi. “By focusing on exponential technologies that shape applied innovations and their value chains, we naturally cover what moves the world and investor’s portfolios.”
Practitioners Know Best
But staying on top of the evolution of all key enabling technologies across industries and regions is a Herculean task that no army of equity analysts or state-of-the-art AI could realistically achieve. So Pflugi and her team applied a tried-and-tested approach in business management to investing: Creating a community of industry advisors with hands-on experience.
“We were convinced that when it comes to understanding technological innovation, practitioners know best. That’s why our investment methodology has always been rooted in the expertise of technology thought-leaders — entrepreneurs, executives, and scientists with deep understanding of core technologies and their applications and a stake in the game,” Pflugi explains. “When you try to follow key technology trends, it’s easy to get caught up in buzzwords and hype. The conversations with our experts steer us away from hype and guide us to viable applications. They help us understand not only where money is being spent, but most importantly, where money is being made.”
Separating Tech Hype from Value Generating Innovations
By now, The Singularity Group’s community of experts, The Singularity Think Tank (STT), includes over 35 carefully selected experts. To identify which innovations can penetrate industries and achieve exceptional growth, TSG’s investment team continuously consults their experts and engages them in dedicated task forces and panel discussions. Experts’ insights are meticulously dissected and form the foundation of the company’s proprietary investment research. Covering ten curated Singularity Sectors, the general purpose technology buckets that are at the forefront of TSG’s investment focus, STT experts thus help the investment team to translate high-level and complicated concepts such as AI, Advanced Materials, and Robotics into specific products and services and their value chain.
According to historian Jacob Soll, the concept of a Think Tank dates back to the humanist academies and scholarly networks of the 16th and 17th centuries. In Europe, the existence of think tanks were recorded as early as the 800s, when emperors and kings mobilized groups of intellectuals to argue with the Catholic Church about taxes. (source: Wikipedia)
The Singularity Group’s Director of Research, Shiko Ben-Menahem, who took the helm of the Singularity Think Tank earlier this year, explains: “When you drill down to which technologies are really creating value in products and services in the market today, you get a very different picture from what the popular press and corporate communications would have you believe. Corporates are still earning very little money from quantum computing, augmented reality, self-driving cars, Web3, and NFTs, whereas exciting innovations, particularly the ones impacting non-tech sectors, are typically overlooked. By scrutinizing the value chains of applied innovations in a painstaking research process, we are able to identify remarkable investment opportunities and get a very balanced and current perspective on a technology’s true potential.”
“Take the example of IoT,” adds Chief Investment Officer Gregory Hung, “You would think that there’s huge growth potential for a lot of high-tech hardware as IoT solutions roll out in the coming years. In reality, a lot of that hardware is highly commoditized and low-margin. You need much more granularity and technical know-how to identify the attractive investment opportunities. That’s where our experts play an invaluable and unique role.”
Innovation Thought Leadership
While one can find many different kinds of innovation think tanks globally, the Singularity Think Tank is unique in its combination of scope, caliber of experts, and focus area. Within Europe, it is one of the single largest independent Think Tank of its kind to cover technology and innovation across all key technology domains. In a time where technological innovations are pervasive and firms compete on a global scale, the Singularity Think Tank is an important and unique guidepost. “We are very fortunate to have such a knowledgeable and dedicated group of specialists to keep a pulse on applied innovations” says Ben-Menahem. “Our ambition is to broadly disseminate the insights that arise from our expert engagements. Beyond creating attractive investment products, we believe that our think tank’s thought leadership has a much wider benefit in a world where it’s often difficult to separate figure and ground.”
For more information, please visit: https://singularity-group.com/index/.
