Some thoughts on how attitudes to innovation change in periods of economic decline... It’s a difficult balancing act enabling cycles of innovation to grow while experiencing fluctuating economic cycles. However there are sectors and markets with potential to highly benefit from these technical breakthroughs.
Article below includes key takeaways from analysis by JP Morgan on new Pitchbook data on 2022 activity as well as how outlooks in the SpaceTech market compare. Interestingly, there are specific overlapping industries with potential for growth within each.
Unsurprisingly, varying levels of optimism exist across the different market outlooks. Although there is one thing all parties agreed on – for companies creating technologies fulfilling industry needs, there are markets to be tapped into.
Interestingly, a common theme across venture and Space reporting was the need for secure data linking and communications. Investors below all had aligning thoughts on these areas. Has innovation in cybersecurity been abandoned too long?
“Across energy transmission, renewables, and clean tech, we’ve got five company-side raises underway right now, and they’re all actively negotiating term sheets or closing rounds. There are always some sectors that are either unaffected or countercyclical, and it’s about finding those. Cybersecurity, for example, continues to be robust. As one of my clients says, “Hackers don’t care about inflation.””
Joe Altendorff, Dentons Venture Technology Group
..”we expect expenditures for equipment and technology, including software, to remain resilient. Solutions to enhance efficiencies, modernize supply chains and safeguard infrastructures are increasingly viewed as nondiscretionary outlays for commercial customers. The rise in geopolitical tensions and incidences of cyberaggression over the past couple of years reinforces this view”
Ginger Chambless, JP Morgan.
Contrarian investing is often a good way to make money. If you look back over the last three-four years, the space area that’s received the least amount of investment is what we call downlink or how to get data to Earth in a cybersecure way. We believe there’s huge opportunity here”
Mark Boggett, Seraphim Space
For investors, the opportunity cost of backing innovation during this period is undoubtedly lower. For entrepreneurs, the ability to build a robust business in a negative climate is one of the best foundations for future growth. For the individuals on both sides of the table identifying the gaps, the opportunity is exciting - as Stanford economist Paul Romer once said, "a crisis is a terrible thing to waste”…