Investment opportunities post-COVID and post-Brexit
26 January 2021
What does a post-Covid and post-Brexit world look like and where might the investment opportunities lie. Here, financial adviser to Angel Business Club, Dominic Berger, explores the potential.
2020 was certainly a year of personal adjustments, where we have all had to get used to working from home and conducting our business online.
The team at Angel Business Club has found that the combined impacts of COVID-19 and Brexit have led to an inevitable shift in its investment lens. What started out as businesses and investments being resilient to COVID, has transformed into conversations around the ‘new normal’ with an acceptance that COVID-19 was not merely a blip, but has shaped the way society will function moving forward.
The new normal
Out of adversity comes opportunity. As medical experts bring fresh hope that a vaccine will return us to normality in 2021, those industries most affected by the pandemic naturally become investment prospects. We have already seen a strong line up in Leisure-Tech plays coming through.
Cryptocurrency and its various guises have seen a recent spike in activity. Is this because we are now, more than ever before, locked into our computers, or is it because the trust in traditional banking systems is beginning to fail as the younger generation seeks to go off grid?
2021 could be the beginning of the disruption of the banking industries that crypto has threatened for so long to unleash. Spain’s second-largest bank BBVA was recently reported to be poised to enter the cryptocurrency trading and custody space, while the increased numbers of token offerings and the improvement in the underlying technology suggests that the 2020s may be that decade. We have a play in a company called Xcademy, the first and only academy for aspiring YouTubers who will soon be launching their own utility token.
Despite the above, Angel Business Club continually harks back to the tried and tested metrics of backing businesses we believe in — businesses that address a problem with a solution; businesses that have an existing market and can clearly demonstrate how to grow that market and defend it; businesses that have the dream of one day disrupting a market or quite simply, ‘blow the bloody doors off’.
But then you have the little issue of Brexit. It seems like a long time ago that we were all consumed with the EU debate and now it is upon us. No matter what anyone says, mapping the Brexit effect into the growth and development of an investment portfolio is extremely complex. This is mainly because our politicians (who do not come with business experience) are doing a great job of driving rhetoric rather than orchestrating a deal. The notion that we must protect our sovereignty is incredibly naïve and misplaced.
In every deal there are compromises and standards. The main elements of any trade deal will always be shared standards to create a level playing field and to ensure the goods or services meet the required levels. The fact our politicians think that they have the ability to take ownership of the UK’s standards is the heart of the issue and one that is so grossly misplaced that it is likely to lead us to a place where there is no trade deal with our neighbours… let’s hope not.
The compound effect of both Brexit and COVID will make 2021 a volatile year. But, as above, with volatility comes opportunity. Industries to look out for in 2021 in the UK are:
Brexit will be a great opportunity for British manufacturing particularly in fast-moving consumer goods. Our investment in Skinny Tonic for instance is already seeing a big 2021 because major retailers need new UK-based supply chains.
Travel and Leisure Tech
The new normal will bring many great new ideas to a market that needs to reinvent itself, and many pre-COVID established businesses should bounce back.
2020 has taught us that online and digital businesses have tightened their grip on the global economy. Innovation in payments is an area we are closely monitoring.
Health and Wellbeing Tech
We have never been so consumed with our wellbeing and COVID has certainly heightened the market. This is a sector that we expect to be frothy in 2021.The knock-on impact of the COVID-19 pandemic will be felt over the next few years but as we enter 2021, there are promising signs for the investment sector. As always though, if you are going to delve into the world of investment, crypto and private equity, we’d always advise that you do your research first!
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