Atara In Conversation: Robert Taylor in conversation with five leading technology investors on what the future holds for the sector, here are their incredibly insightful views.
Investment into the technology ecosystem has been on a rollercoaster journey in the last 18 months. Some portfolio companies' revenues have ground to a halt...
Investment into the technology ecosystem has been on a rollercoaster journey in the last 18 months. Some portfolio companies' revenues have ground to a halt, while others have thrived due to the acceleration of digital transformation. Moving on from the pandemic, these times of uncertainty have been replaced with excitement and optimism, with record levels of investment being recorded in 2021.
With this in mind I interviewed some of the leading technology investors and operating partners in the form of David Klein (One Peak Partners), Christine Ahlstrand (Standout Capital), Indra Sharma (Peak), Joe Hurd (SOSV) & Adrian Hall (Sway Ventures), to understand what they have experienced over the past 12 months, what trends they are seeing in the market and what they are most excited about heading into 2022.
With the world slowly returning to ‘normality’ what are the biggest trends you are picking up on heading into the final third of this year?
David Klein @ One Peak Partners – “People across the board are realising that technology is where they need to be, both now and in the next 5-10 years. Digital transformation is still so new for many industries. We are seeing many PE firms raise growth equity funds to get more involved in the software space. US firms are waking up to the fact that you can build very successful companies out of Europe, and the pandemic has somewhat levelled the playing field in that regard.”
Joe Hurd @ SOSV – “I’ve seen a real interest in companies that focus on “deep and hard” technologies to address complex issues such as decarbonization, automated supply chain, digital manufacturing, and industrial efficiency. We are seeing more and more investments into companies that focus on climate change, increasing battery storage, building better power sources and producing alternative protein. Food security - how are we going to feed the next 2 billion people added to the world during our lifetimes? In the wake of the Floyd/Aubrey/Taylor murders in the U.S., I've seen a few companies focused on improving medical care for ethnic minorities - individuals typically on the fringes of the medical establishments. How can we improve access and outcomes for these groups?”
Indra Sharma @ PEAK – “I have identified many new trends but one of the most interesting is within animal technology. As a result of a number of people buying pets during the pandemic, the technology and services within the space is booming. I recently made a private investment in Lassie (a digital pet insurance provider) and we are monitoring a number of others as spending on pets is increasing, particularly around maintaining pet welfare.”
Christine Ahlstrand @ Standout Capital – “There has been a real upswing in the digitalisation of healthcare. We have 2 portfolio companies within HealthTech, and we are seeing a lot of activity in the sector. What is evident is that it’s a slow moving, traditional sector and the ideas on how we can enable them to be more efficient are really coming to the forefront. It’s an industry that has previously be reluctant to transform but the pandemic has pushed this trend and created a stronger sense of urgency when it comes to improving their working model, improving patient workflow and leveraging data more efficiently. The retail sector is another mega-trend that has propelled much further ahead in terms of digital transformation.”
Adrian Hall @ Sway Ventures – “At first observation at a market level, it’s been an incredible recovery and the market is showing great confidence in terms of both investment and growth. Due to the remote nature of workforces, the approach to building teams and hiring is so different and HR & recruitment technologies to support this are very interesting. FinTech and financial services are also booming as it touches on so many different industries and this is getting a lot of attention from us.”
What has changed most for you during the pandemic from a process/day to day perspective and what is here to stay?
Joe Hurd @ SOSV – “Being comfortable having fully remote conversations. That is definitely here to stay! In my view, Zoom and other platforms are great for one on one conversations, but the platform's utility decreases for larger groups of more than 5 or 6. In a board meeting, or an investment committee, where reading body language is critical, it's tough not having in person interaction. But as a whole, the flexibility offered by these platforms has been great.”
Christine Ahlstrand @ Standout Capital – “Processes are moving much quicker, and so are company assessments. Ensuring we dig even deeper as a result of not sitting in the same room has been critical. On the fundraising side, which we're doing predominantly through video, you have to change the way you demonstrate your energy and get your personality across, which can be challenging. What is here to stay? The efficiency of using digital tools to meet with founders and investors, and our flexible working environment."
Adrian Hall @ Sway Ventures – “There has been much greater focus and emphasis on psychological sensitivities within a team, you can’t read the room as well in a remote world and it’s difficult to gauge body language or encourage individuals to speak up. As a result it means that every leader needs to be a people leader at their core, it’s reinforced that management principal more than ever and that is here to stay.”
Indra Sharma @ PEAK – “Saving on travel time has been a big factor for me. That flexibility which has changed corporate culture is here to stay, the international funds in Europe are now open to hiring beyond their HQ which is so refreshing and will only strengthen Europe’s investment eco-system.”
David Klein @ One Peak Partners - “Communication both internally and externally has changed the most, and a lot of the interactions have moved to Zoom, Teams and Slack. As a result, it is unlikely that travel is going back to the same levels as before the pandemic. Physical presence is really important to get to know founders and build strong relationships, but many other discussions can be done remotely. For example, not all board meetings need to be in person, and the new normal will likely be half in person and half via video.”
What are you most excited about for 2022 with regards to investment?
David Klein @ One Peak Partners – “I don’t expect any significant downturn in the next 12-18 months. For 2022, I expect a similar environment to today given that the world is over-leveraged, interest rates are close to zero, none of the central banks can really increase interest rates given the debt burden, and what that leads to is the pension funds, insurance companies, etc., need to allocate to higher risk and return strategies. This adds to the inflow of capital into growth equity and venture capital. There is lots of money in the market that needs to be invested, and I’m excited by the amount of activity and opportunity in a post-pandemic world that is massively accelerating the digital transformation trend.”
Christine Ahlstrand @ Standout Capital – “People! 100%. With everything opening up I’m looking forward to attending in person meetings, gatherings and networking events again. The energy you get from meeting with people can’t be replaced and I’m most excited about getting that back into my day-to-day working life.”
Indra Sharma @ PEAK – “ The biggest thing is of course getting back to meeting people in person. I’m very excited about attending events and gatherings again, I miss that vibe. I am also really looking forward to what new innovations are going to come from 2022 and making some great investments.”
Adrian Hall @ Sway Ventures – “I’m most excited by the dynamism in the market today and I can only see it improving next year. There seems to be more acceptance and willingness to try new technologies and digital transformation has accelerated so many industries in the past 12 months that will only breed new opportunities for 2022. I will be keeping a close eye on the transport and logistics industry.”
Joe Hurd @ SOSV – “In the US, we need to rebuild our infrastructure. The government's investment into infrastructure improvements, addressing supply chain issues, and building out broadband and EV charging networks will create entirely new industries and ways of doing business. I also think that the pandemic has forced service providers to re-think how basic services such as elementary education and health care are delivered, and this is something I will be following closely in 2022. I look forward to seeing how the landscape evolves.”
This interview series is a collection of articles commissioned by Atara Partners with some of the world's fastest-moving technology businesses and their leaders.
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