Introducing our Fund IV investment themes

By White Star Capital’s Early Growth Team

Ahead of the launch of each new fund, we challenge ourselves to form strong convictions around investment themes that address the contemporary global challenges and opportunities society currently faces.

Our themes of focus have evolved in response to rapid technological adoption and the changing world around us, but the criteria we apply to each investment have remained consistent across our three Early Growth Funds to date.

It’s important to note that since the launch of our first fund in 2014, we’ve approached investing with the clear understanding that tech is borderless. Companies from all over the world can address the themes we identify, and as such we aim to stay ahead of the curve on emerging, impactful trends by building strong, sector and region-specific conviction.

Looking ahead to our fourth fund, we have identified four specific macro themes that we believe are primed for continued tech innovation in the coming years:

• the impact of widespread demographic shifts;
• the digitisation of industry and enterprises;
• the creation of new digital infrastructures to handle the transfer and security of zettabytes of data,
• and finally, the demand for climate technology, new circular business models, and green innovation.

Over the next few months, our team will be publishing four reports that go into each theme in detail, showcasing the sub-sectors and types of companies we’ll be looking to invest in following the close of our next fund.

Demographics in Motion

As the existing labour force transitions into retirement and wealth shifts from baby boomers to the next generations of millennials and Gen Z, entire economies are being reshaped around new ways of working, investing, and living.

One in five people across OECD countries are already 65 or older and Gen Z is expected to make up 25% of the workforce within two years. These long-term structural demographic shifts offer a wealth of opportunities for new solutions and business models to emerge.

We see the silver economy, digital health, consumer fintech, and the future of work as the sectors most primed to benefit from these trends.

Companies we’ve backed that are relevant to this theme: Butternut Box, Dialogue (exit), Freshly (exit), and Numan.

The Fourth Industrial Revolution

We are entering a new age where consumer-grade SaaS is digitising every business and AI is driving the shift towards automation, even in legacy industries.

Structural labour shortages combined with the drive for higher margins is fuelling the demand for automation solutions and software solutions that can drive efficiency and growth. The technology sector’s market share of the S&P 500 has doubled over the past 20 years, and 70% of all businesses are now exploring or already using automation.

We see vertical SaaS, industrial automation tooling, and business process automation solutions as primed to benefit from the increasing adoption of technological solutions by all companies and industries.

Companies we’ve backed that are relevant to this theme: Carbon6, Chord, Vention, and Wrk.

Data-driven Transformation

The entire digital infrastructure of the information age revolves around zettabytes of data being transferred every year. As such, how data is created, stored, leveraged and protected will dictate the winners of tomorrow and an entire industry of solutions has appeared to transform, support, and enhance the 0s and 1s that make up our modern world.

We’ve seen emerging data-driven platforms drive immense value creation for stakeholders over the past few years, while the number of unique data vendors has tripled in the last decade to support these new technologies.

We see data infrastructure management, data protection and governance, productivity and developer tools, and DevOps and MLOps tools as areas that will experience significant growth in response to the demand for improved digital infrastructure.

Companies we’ve backed that are relevant to this theme: Flare, Mnubo (exit), and Red Sift.

Sustainable Global Economy

The number of climate change-related disasters has increased rapidly over the past few decades, and it is no surprise that sustainable tech investments have grown at a similarly fast pace to try and address these problems. A multi-decade overhaul of the global economy is required, and underpinning this shift will be a new cohort of low-carbon and sustainable technologies that will form the bedrock of a greener economy.

Macroeconomic forces, including Europe’s energy crisis, ambitious government green initiatives, substantial technological improvements in renewables, biomaterials, and carbon removal, and finally growing alignment in capital markets toward green investments are coinciding to drive major change across industries, while also creating new ones.

We believe we should be involved in this revolution not only because it is necessary for the good of our planet, but also because it will undoubtedly see the rise of new billion-dollar success stories. While there are vast amounts of innovative technologies to look at within climate technology, we are most excited about climate SaaS, circular economy, climate finance, and climate regtech platforms.

Companies we’ve backed that are relevant to this theme: 900.care, Novisto, SWING, and TIER.

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We’re looking forward to sharing our first report on the Sustainable Global Economy later this month. Stay tuned for our next blog that summarises our research and thinking!