ALTIOTAKE FROM 26-30 OCTOBER
Each week, we review the press, highlighting and responding to interesting and relevant articles in the news.
Emerging tech ecosystems
New developments in technology arise on a regular basis. Just this week, we’ve seen announcements from the sector like Samsung Electronics and Stanford University’s 10,000PPI ultra high-resolution OLED display and USNC’s nuclear propulsion concept for NASA that could reduce travel time from Earth to Mars to just three months. While these inventions may not have a direct impact on consumer behaviour just yet, they may well do so when integrated into modern life. Altio is paying attention to the ramifications and applications of new inventions across the tech sector. In pursuit of progress and outpacing competition, innovation of disruptive technologies can change the modern landscape and global economy. As tech enthusiasts, Altio is particularly interested in sectors leading to new ecosystems such as VR or the space industry. Meanwhile, as finance experts, Altio follows and analyses the implications of these disruptive innovations and inventions in the tech sector. But don’t fret, we’ll let you know as soon as there is hyper-realistic VR of deep space.
Electric vehicles take to the highways
In the last few years, electric vehicles (EVs) have only represented about 5% of all new car sales. However, this rate is rapidly rising in response to increasing emission regulations, particularly in Europe. By the end of 2020, EV sales will have tripled in Europe. Transport & Environment, a green policy group, predicts market share of electric cars will be up to 15% next year. Nevertheless, until recently, there has been a lack of investment in the manufacture of EVs, which is to blame for high price tags. This lack of investment interest is pivoting now, and will continue to do so in the coming years as carmakers must to sell higher shares to comply with EU emission standards. Altio sees the disruptive potential in investing in EVs as they change the face of the auto industry. This means investing in the manufacture of EVs and the infrastructure to support this transition, such as charging stations. Motivating investors to consider EV potential should be easy: EVs are cheaper to operate and maintain, purchasing an EV provides substantial tax relief, and you’ll be doing your part to save the planet. At Altio, we think it’s perfect timing to hop on the bandwagon, err, electric car.
Starting a start-up in Europe 2020
Looking to launch a start-up in Europe? You may want to consider Switzerland, alongside the healthy ecosystems of Germany and UK. NimbleFin’s 2020 start-up ecosystem survey places Germany, UK, and Switzerland as the top three countries for cultivating start-ups, claiming these countries have “highly educated populations, strong economies, healthy business environments, and relatively low costs for conducting business.” While Germany and the UK retained the top two spots, the surprise this year came with Switzerland upsetting Ireland for the third spot. Switzerland rose in the rankings due to its top ranking in Business Climate and Labour Force Quality. Despite scoring #25 in cost of doing business due to high rental and salary costs, Switzerland has the potential to nurture bountiful growth with the best market dominance conditions and a low regulatory burden. Business climate can make or break a start-up, and, for Switzerland, these favourable conditions offer opportunities for innovation. So, what does Altio make of this ranking? Countries that encourage and enable start-ups, in turn, encourage creation of jobs and fuel competition, contributing to economic dynamism. Accordingly, Altio thinks countries should strive, within their means, to promote such a climate. Coming in 3rd out of 31 European nations, Switzerland has demonstrated that it is both a source and instigator of innovation. Ecosystems like that of Switzerland help keep economies healthy, growing, and dynamic, well-positioned for change.
Disruption in real-estate
There seems to have been an understandable loss of appetite for commercial real estate in 2020. While the future of traditional offices and workplaces is yet to be seen, observable factors support the assumption that commercial real estate is changing. In Singapore, we saw office rents face their steepest decline (-4.5%) in 11 years during the third quarter of 2020. Meanwhile, in September, we saw prime central rental values in London fall to an 8.1% annual decline. The team at Altio considers the suggestion of Kynikos Associates founder and infamous short-seller Jim Chanos, claiming there is increasing interest for smart investors to short commercial real estate. At Altio, we find that investing in innovation can be particularly profitable in sectors facing disruption, with little alteration of mindset. For instance, if we short the disrupted instead of betting on the disruptor, we open up the potential for huge gains. Real estate puts this theory into practice as an industry facing serious disruption. Though risky, by shorting disrupted Real Estate Investment Trusts (REITs) and Real Estate exchange-traded funds (ETFs), investors can profit immensely.
Freelance working - a temporary state of mind?
In mid-October, freelance banking start-up Lili raised an additional $15M, piling onto its $10M seed round a few months ago. The start-up is continuing to raise funds under the assumption that more and more people are turning to freelancing. COVID-19 has indeed pushed skilled labour towards freelancing, and Lili has experienced rapid growth, with transactions up 700% since the beginning of the pandemic. Though good for existing and COVID-turned-freelancers, Lili is not applicable to the majority of professionals. Though Lili CEO Lilac Bar David predicts that the recent growth of the freelance economy could be a mainstay, Altio disagrees. Freelancing is not a permanent solution for everyone, rather, it is a temporary solution for an unpredictable situation. Bar David claims “workers are discovering the benefits of freelancing,” including independence and customer diversification, which her company Lili supports. However, Altio believes that after months of job insecurity, people are going to want stability once the pandemic is over. Surveys show that 85% of UK employees want to come back to the office. Regardless of high-def video conferencing abilities, creativity and innovation require skilled and complementary profiles to be face-to-face. As such, Altio is not confident about the durability of Lili or the alleged turn towards freelance working.