Smaller companies will tend to be more vulnerable to the pandemic and its economic turbulence. Most have little or no financial reserves and sell a limited range of products. However, well-funded smaller companies have a major advantage over larger firms as they can change direction much quicker and this flexibility could prove vital as they grow their way out of the crisis. Below we identify some essential characteristics the management teams of smaller growth companies will need to display in order to be successful and attractive to investors.
In a COVID-19 economy, it’s your job to adapt or be left behind
To stay competitive, businesses must diversify revenue streams, manage risk, access financing, and do everything in their power to maximize productivity. It is vital for companies to retain existing customers – many of whom will have different expectations in a new-normal world.
As the UK opens up extensive daily data will be key. Investment banks and consultancies have increasingly been “nowcasting”, as opposed to forecasting, to obtain the most up to date information available.
On 24 June PWC released their latest economic review providing updated UK economic data, including the results from the Office for National Statistics (ONS) Business Impact of Coronavirus Survey, and highlighting April’s GDP data, retail sales and the labour market. There is also a special focus on the impact of COVID-19 on UK trade and its prospects for 2020.
In our latest blog, CSS Partners highlights some of the areas of the UK economy seeing early signs of recovery as well as PWC projections for the rest of 2020 and into 2021.
In our latest blog, CSS Partners looks at the extensive In Gold We Trust report and also at the latest figures from the World Gold Council on investment levels into gold.
The In Gold We Trust analysis is an annual report on the gold market by Incrementum. The full report runs to 350 pages and is a detailed analysis of macro and micro economic factors and other fundamentals that may have an influence on the gold price going forward. The full report is available at www.ingoldwetrust.report
Below we try to summarise the key findings of the report and what we can learn from the recent strong performance of gold as an asset.
Gold is heading for $3,000, Bank of America says. “The Fed can’t print Gold”
21 April 2020
Over the past twelve months, the gold price has increased by 34% to over $1,700 per ounce. Many analysts are forecasting great things for gold with Eduardo Elsztain predicting “this level only express the start point of what might be the strongest rally of the metal as never before, at the same pace that fiat money is being printed worldwide”.
The first quarter of 2020 was very strong for UK fintech companies with 112 companies raising £1.1 billion, up from £410 million in the fourth quarter of 2019. In the article below we look at how the current economic crisis caused by the coronavirus pandemic has affected the sector thus far and what might be needed for it to maintain its position as the shining light of UK growth.
Bounce-Back- Ability: How can Companies Thrive in the “New Normal”?
Below we look at what companies need to do in order to thrive in a fast changing economic environment. We also explore the key factors that drive corporate innovation as well three technologies experiencing increased demand in the “new normal”.
Whilst an economic crisis forces companies to adapt to a “new normal”, the turmoil also throws up previously unavailable opportunities for innovative companies. With hindsight, previous crises seem obvious buying opportunities however buying when there is panic in the air is much easier said than done. Below we look at a systematic approach for investors who feel unprecedented times can create investment opportunities in game-changing companies that drive the recovery.
With global investors looking to the UK technology for growth, should private investors do the same?
In what was another record-breaking year, investments in the UK tech sector soared to £10.1 billion last year – up £3.1 billion on 2018’s very strong figures and the highest in UK history. Venture capital into US and Chinese tech firms plummeted by 20% and 65% respectively. Investors are turning away from the world’s two largest tech markets and instead looking to the UK for future growth.
The UK tech sector appeals to investors for a number of reasons including a business friendly environment, talented workforce and longstanding reputation for innovation.
Over the past decade quantitative easing has suppressed fixed income yields globally, this has led to a surge in equity investment. With stock markets showing lower returns, venture capital has become increasingly popular amongst private investors, especially with the significant tax incentives available. Here we look at how institutions tend to invest in venture capital to explore what private investors can learn.
What Investors Want
- Appropriate Investments
- Clear and understandable information
- Direct answers to questions
The fintech sector continues to show growth and innovation. At the same time, it is not an industry that is dominated by the biggest names. Innovation and a creative approach to technology allows smaller start-ups to compete toe to toe with more established brands. This makes it a very popular choice for those looking for the highest growth investment opportunities.
Venture capital funding of fintech start-ups topped $32 billion globally in 2018 according to CB Insight. At the same time, in 2018 there were 30 fintech exits in the US at over $7 billion in value. M&A activity is expected to accelerate as financial services incumbants acquire emerging fintech companies in an effort to stay competitive. With more fintech unicorns than any other industry vertical, fintech is widely tipped to remain one of the highest returning VC sectors with no shortage of high potential areas to disrupt in financials services.
For investors that have not already jumped on the fintech bandwagon, fear not as the next wave of value creation from younger fintechs could well be even bigger than the first.