We know all about the investment mega-trends; areas such as infrastructure, healthcare, blockchain, electric vehicles, more fintech. But where are early stage niche investors like Tom Chapman, Scott Tierney and Jonathan Hera going to jump next?

Early stage investors are looking beyond the current trends, even deeper than the 5-10-year trends. They’re looking at what demographics, geopolitics and future-tech advances can tell us about life in 20-30 years or more, and what corresponding investments make sense.

It’s not an exact science, but here are three themes which could tie together the kind of future investment that really pays off for the smart early stage investor.

1. The Common Good

Extrapolating the current developed-world attraction to leading meaningful lives that do no harm, there’s no doubt that we’ll see a rapid increase in impact and sustainable investing. We can already see big growth in agricultural technology, with more than $16.9 billion in funding in 2018, and in green tech, where just last month Facebook invested in a large solar project for the first time.

But Common Good businesses will need to cover a lot more ground than this by 2050, and for investors it’s worthwhile exploring the areas that are only just emerging, and looking more closely at the very big threats on our global horizon.

One such is the worldwide water shortage. According to the World Economic Forum, water shortages are consistently in the top three global crises we face each year. To put this in context, today, more than 600 million people in India are dealing with high-to-extreme water shortages, caused by one of the worst droughts in its history. By 2030, the Indian government’s think-tank predicts that 40% of Indians will have no access to drinking water.

This might sound unimaginable, but it’s a genuine threat and it makes water conservation a real issue, and businesses in this sector are bound to grow rapidly. Not only that, but desalination at an affordable cost, and at scale, is an urgent business issue. Graphene membranes and new technologies such as temperature swing solvent extraction (TSSE) are being mooted, and these tech areas are ripe for investment.

2. The Last Mile

According to a recent estimate by the United Nations, by 2050 the global population will stand at something in the region of 9.7 billion. The overall growth rate is slowing slightly, but the big increases are set to occur in some of the world’s poorest and most rural countries, including in sub-Saharan Africa where the population is projected to nearly double by 2050.

It’s no secret that this is a very big problem indeed, not least when combined with a changing climate that puts food production under severe pressure. But the solutions have, up until now, been scattergun rather than cohesive, and it’s likely that a more strategic global response will be needed.

One response to help support this much larger population has been an expansion on the idea of the last mile. This term has traditionally been used to describe installing telecoms cables to the property from the cabinet in the street, but there has been increasing discussion about last-mile solutions involving increased community capacity.

The investment opportunities here lie in identifying which technologies will help rural communities the most over the long term, be that in agriculture, energy, water, education, healthcare and transport, and funding the businesses that are making these solutions affordable, portable and scalable.

Right now many of these solutions exist. We have off-grid energy and irrigation systems, telemedical services delivered via the internet, and flat-pick homes. What we don’t have is the will to get these the last mile to where they’re really needed. But in a few years’ time, as the population grows, so will the demand, and the clamour.

To many people, ‘agile’ is an old word; one first used in a general way in the 1990s to describe the iterative way software teams work collaboratively and push forward using scrum methods. But the word has recently started to be used to describe working methods across a whole raft of industry sectors, including government, both corporate and public.

Agile has come of age and, now it has been taken up by the public sector as a label, it’s likely to have a very powerful effect on the way governments operate in the next few decades. At the moment, Agile Governance is being used to describe the drive for more public control and interaction, such as crowdsourced policy-decision making. But this will change, and it’s possible that we can predict the direction.

At the moment, most countries have more laws and regulations than any one person can ever ingest. But even if we accept that, and say that’s why we have specialist lawyers and regulatory bodies, there are still too many to cope with when areas need amendment or scrutiny quickly. On top of that, the world is changing so rapidly that humans alone will no longer be fast enough to deal with new regulations, disseminate them and enforce them.

This is where artificial intelligence comes in, in the form of regulation technology or regtech. A handful of regtech companies are working on Natural Language Processing-based AI systems that can literally read and understand every single regulation. But regtech is much bigger than just a tool to help companies with compliance or regulators keep on top of amendments.

In the future, regtech will be the foundation stone of every bank and government worldwide. Because it makes life easy. It brings experts together and vastly increases productivity. It makes it possible to detect unusual patterns of behaviour in real time; it makes government oversight simple. Whether we like it or not, regtech is going to be huge.

These themes point in three possible directions for future investment. Some early stage high-growth investors might be funding these type of businesses right now. If not, they soon will be.

Equities Contributor: Scott Johnson

Source: Equities News