After a period that has seen the value of funding rounds drop, some big names making equally big layoffs, and a generally pessimistic economic outlook, investing money might seem a risky endeavour. But the right investment can always yield big rewards, so we asked some tech names for their advice.
So, when you pull out that winter coat and find $1 million dollars in your pocket — and which of us hasn’t had that experience — what should you do with it?
Before we begin, and as many of the investors pointed out, remember, that we are not financial advisors, and the value of investments can go down as well as up!
First tip: be sensible
Perhaps surprisingly, diverse portfolios were a common theme. Invest in tech, but make sure you also have ’safe’ investments, too.
Ivan Nechaev, investment director and vice president at Access Industries, is an angel investor, but suggested that 75% of his investment would be in relatively low-risk products like commodities, bonds, and equities. “I am a strong supporter of diversification, and I believe this would help generate the most wealth over time,” he said. And for that remaining 25%? “A unique story-driven opportunity,” he said. “Deploy the capital to make angel investments, as there are potential high returns to be made as well as the opportunity of supporting entrepreneurs that change the world.”
John O’Connell, Executive Chairman at ScaleUp Group, also recommends balancing risk and reward, but for the risk, he recommends a government scheme to support new businesses. “The UK govt SEIS/EIS scheme for investing in young-ish businesses is very generous,” he said. “Currently, it’s 50% or 30% income tax rebate up front with capital gains tax-free on, hopefully, a successful exit!” And now is the time, he added: “Most tech valuations are depressed currently, so it’s a good time to invest.”
Make a difference
Investment is not just about making money, and you can use that investment to help make a difference in the world. Bradley Jones, Senior Investment Manager at Earth Capital, recommends meaningful investment. “Battery management software is a win-win,” he told us. “Investors can reap significant financial rewards whilst creating a more sustainable environment by supporting the transition to clean energy.”
A major challenge of renewable energy sources, like solar or wind, is that they are not always predictable, so need batteries to help them manage demand. “By investing in battery management software, we’re one step closer to Net Zero as its knock-on benefits ultimately reduce greenhouse gases,” Jones said.
Mouloukou Sanoh, Founder and CEO of Mansa Finance, also highlighted the potential to make a difference. “I would first prioritise the social impact of that investment,” he said. Highlighting the potential reach of blockchain he added, “investing across a diversified portfolio of real-world asset credits on DeFi protocols can also provide a high yield whilst boosting economic growth in emerging markets, including Africa, Latin America and South East Asia.”
Invest in underserved markets
Some of the world’s most successful businesses owe their position to identifying those opportunities in markets that were underserved and with potential to grow. And your investment can benefit from this strategy too.
Priya Oberoi, the founder and General Partner of Goddess Gaia Ventures, says that women’s healthcare is exactly that sort of market now. “The women’s healthcare sector is a $1 trillion market but only 4% of all healthcare research and development funding goes to women’s health and 65% of that is focused on fertility,” she said. “80% of all healthcare purchases are made by women, so why wouldn’t you sell to them?,” she added.
And, Oberoi suggests, changing the way we think about women’s healthcare would have a transformative effect, “if we can shift the narrative from women’s health being a ‘moral obligation’ to an investment opportunity that will deliver significant returns.”
Don’t invest in the current fashion, invest in what that fashion needs
Just like fashion, the tech sector has trends, and, currently, AI is definitely in vogue. However, investment in AI might not be the wisest choice.
Alex Menn, partner at Begin Capital, a London-based venture capital fund, suggests a different way of thinking about it. “Those who profit the most are not the ones doing what everyone else is doing, but those who provide them with tools,” he said. “During the gold rush, it wasn’t the gold miners, with rare exceptions, but those who sold shovels who made a fortune.”
And he sees AI as the modern equivalent. “The world is currently gripped by AI fever,” he said. “Which means you can profit by providing tools needed by AI developers.” He suggests looking for startups that optimise database efficiency or cloud computing.
But however you invest that found cash, getting the right tech investment can be incredibly rewarding, as many successful startups, and their investors, have found. As Menn adds, “although nothing is ever certain, good technology always sells for millions, if not billions.”
