The investor landscape has changed considerably since COVID-19, and for our team, it’s been exciting to see a variety of investor trends emerging.
While the pandemic has affected many businesses, at Snowball Effect, we’ve seen increased interest amongst the general public in private equity investment opportunities, greater high-net-worth investor interest, and the rise of alternative and tech investments.
Our team of Directors share a few key investment trends that they are seeing and explain why investors should take note.
Director of Growth Capital
Now more than ever, investors are looking for businesses that have evolved through COVID-19. They’re looking for signs that a company has developed a more resilient supply chain, a strong brand presence online, and, if possible, an easy to use online store.
As New Zealand and other countries start to return to normal, the best businesses have taken the opportunity that COVID-19 presented to improve their business rapidly. Those who have not simply won’t be as competitive or appealing to investors and may also have to face changing consumer habits.
Director of Partnerships & Growth
COVID-19 has seen many Kiwis return home from overseas. They have brought with them their global connections, skills and funds to invest in New Zealand companies.
Now more than ever, we have some of New Zealand’s most highly skilled, high-net-worth professionals back home who are actively looking to apply their connections, expertise and funds to help Kiwi companies succeed.
Director of Growth Capital
I’m seeing a strong trend led by global venture capital funds seeking investment in deep tech, early-stage companies that have developed IP with global application.
Although some local platforms have made it easier to access public equities, retail investors typically have limited access to private market investments, particularly to the deep tech investments made by the large global venture capital funds. However, this is changing. Although still limited to investors meeting the "wholesale investor" criteria, Global VC fund, OurCrowd, recently opened up their latest fund to accept $10k minimum investments from investors through the Snowball Effect platform. We are working on providing Kiwi investors with more global venture capital opportunities through international funds in the future.
Director of Private Capital
With interest rates at an all-time low and record levels of stimulus being injected into the economy by central banks, public markets have become highly valued, and yield from most bonds is now non-existent. This has driven investors to look at alternative, higher risk asset classes such as cryptocurrencies to achieve returns. While these alternatives may have valid long term applications and are delivering astronomical returns in the short term, there’s a real risk that some of the factors that have driven their recent popularity could quickly change.
As governments eventually unwind stimulus, interest rates are likely to rise, putting pressure on leverage in the capital markets. This is likely to cause investors to move capital away from riskier asset classes such as cryptocurrencies into safer asset classes. Generally speaking, the quicker the rise, the quicker the correction, so investors must remain aware of price volatility when investing in alternatives.