There has been a significant change in the investment Opportunities after the Covid-19 pandemic. The new social norms like social distancing due to health-related concerns and the lockdown restrictions mandated by the government had consumers turn towards the e-market and e-commerce website.
COVID situation has provided at-home solutions and purchasing options for both leisure as well as work. The pandemic has opened up new opportunities in digitalization for digital media, e-commerce websites, and digital payments, particularly in the Asia-Pacific (APAC) region.
Impacts of the COVID-19 pandemic on the opportunities in investment and how it has changed forever.
1. Positive effects on certain sectors
Venture capitalists and private equity investors were already benefiting from the rapid growth opportunities provided by the healthcare sector. Increased healthcare expenditures are driving the growth of this sector in this region. The sectors like online pharmacy and Telehealth businesses have shown immense growth due to an increase in demand from customers.
2. The emergence of new investment opportunities
The nature of the available opportunities for investments in different types of deals has also changed due to the COVID-19 pandemic. To counter the challenges of liquidity and revitalizing the business, many business owners are focusing on the core assets of the entity which will push the carve-outs trend a major throwback. This trend will remove the preferred control deals and will create newer opportunities for venture capitalists and private equity funds.
3. Some sectors have become an attraction due to lower valuation
The lockdown norms in the pandemic significantly devalued sectors that relied more on the physical movement of employees, required social contacts, or involved in-person transactions. Right now the investors are finding those businesses more lucrative and attractive lacking liquidity and will be forced to be sold at lower than expected prices.
4. Accelerated the emerging trends in technology
The competition to be more technologically advanced has presented tremendous opportunities to investors and venture capitalists. Artificial technology (AI) has also provided virtual solutions and has become a hot trend in recent years. The pandemic has only widened its scope.
5. Scarcity in debt-finance
It is assumed that due to COVID, the share of debt financing in the capital structure deals is likely to fall tremendously. To justify higher-level equities, you need stronger investments.
6. New investment schemes have been created due to behavioural shifts
The pandemic has changed the prospectus of certain areas. For instance, the trend of working from home has become more popular therefore, the importance of connectivity services, apps, and cybersecurity has gained importance too.
7. Holding periods are likely to get longer
Due to lower value, many entities will attract investors and venture capitalists to take over the firms. In already invested companies, the funds will need to rethink their exit strategies as well. The exit strategies for private equity firms and venture capitalists will be changed too.
The change that COVID-19 has triggered has brought a lot of impacts. With changing dynamics, longer working hours due to work from home model, changes in working conditions, etc investors seek safety and wealth preservation.
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