Chartering a Luxury Yacht in SoCal this Winter

Amit Raizada

December 1, 2020

Believe it or not, the period spanning from autumn through early winter is one of the best times to explore the California coast and the many treasures the majestic Pacific Ocean has to offer. With water temperatures still relatively warm and high-pressure systems ensuring plenty of sunshine, spending a day on the Pacific is seemingly inseparable from the Southern California holiday season experience.

This year, the water will carry special resonance for many. After nearly eight months of various degrees of quarantine, the ocean offers the perfect opportunity to get outside the house and indulge in the great outdoors, all while still accommodating social distancing requirements. After all we have experienced over the last year, there’s nothing more liberating than sailing full speed across the water with the wind in your hair and the sea spray lapping across the deck.

One of the best ways to fully experience the California coast is to charter a yacht. These outings offer myriad ways to build lasting family memories all while closely complying with COVID-19 social distancing guidelines.

Amit Raizada, the proprietor of Veloce Yacht, a more than 100-foot vessel based in Newport Harbor, said that many Americans—both Californians and tourists—have been especially eager to hit the water this year.

“For much of this past year, we’ve all been cooped up,” he said. “The ocean is, in so many different ways, therapeutic. It offers individuals the opportunity to, both literally and figuratively, chart their own course—a stark contrast from everything we have experienced this year. With the beautiful weather and the holidays coming up, chartering a yacht is a great way to have some safe fun amid this challenging year.”

Raizada said that families can charter Veloce Yacht to captain their own personal adventures around the California coast. Whether racing from Orange County up to Malibu or enjoying the vessel’s state-of-the-art sound system off the OC coast, Veloce Yacht offers endless possibilities for adventure, he said.

“A popular destination has always been Catalina,” Raizada said. “Located less than an hour off the Los Angeles coast, Catalina is a Mediterranean paradise replete with dramatic contours, hidden lagoons, and untouched nature. Circumnavigating the island is a holiday adventure that families won’t soon forget.”

Raizada said, however, that charting a yacht offers innumerable possibilities, including those for individuals and families who prefer leisure to action. One of the industry’s most popular services is harbor tours, he said. Whether in Santa Barbara, Ventura, or Orange County, harbor tours allow groups to host dinners and parties while gently navigating the harbors, usually at sunset. This service offers unforgettable views and an unbeatable atmosphere. In the age of COVID-19, harbor tours can even accommodate social distancing.

“During this difficult time, safety is more important than anything,” Raizada said. “Harbor tours limited to individual households offer an outdoor opportunity to have a holiday dinner with an incredible atmosphere. Christmas dinner on the deck of a yacht sailing smoothly through a harbor is such a California way to spend the holiday.”

Biomedical Research Is Our Ticket to Normalcy

Amit Raizada

September 26, 2020

Last month, Russia made international headlines after claiming that researchers in Moscow had found the Holy Grail of our present moment—a successful COVID-19 vaccination. The announcement sent shockwaves around the world. At a moment when millions remain out of work, international travel has come to a grinding halt, social unrest has proliferated and daily lives continue inexorably interrupted, a COVID-19 vaccination could be our golden ticket back to normalcy.

Health authorities from around the world, though, were quick to cast doubt on Russia’s purported breakthrough. Dr. Anthony Fauci, America’s top infectious disease expert, said that he “highly doubts” the Russians had truly developed a cure—a refrain repeated in media across the globe. It later came to light that Russian researches had foregone critical phase 3 clinical trials, a crucial set of large-scale human trials regarded as the final—and most onerous—stage before a drug is approved.

While now more than a month in retrospect Russia’s vaccine looks far more like a publicity stunt than a medical breakthrough, the false sense of hope it elicited placed the FDA’s clinical trial procedure into the limelight.

I’ve written before about the hurdles investors and researchers must overcome to get new drugs approved in the United States. As the CEO of Spectrum Business Ventures, I know all too well the frustrations that accompany biomedical investments. In my time at SBV, we’ve backed a firm that pioneered a groundbreaking new cancer treatment that weaponizes the body’s immune system against tumors, eating them away from the inside. We’ve also helped back Dalent Medical, whose trailblazing SinuSleeve has changed the way medical professionals approach ear, nose, and throat treatment.

When approaching a venture within the biomedical sphere, investors should consider the lengthy FDA approval process that could significantly delay returns.

To get a drug off the ground, firms must conduct pre-clinical research. After having procured the necessary data, properly functioning treatments are sent through three rounds of clinical trials. During Phase I clinical trials, the drug is administered to healthy patients. If successful, it will advance to Phase II trials, in which the drug is tested on a small group of individuals who have the condition it was designed to treat. Phase III trials vastly expand the size of this treatment group, garnering critical information needed before taking the drug to market.

This is an arduous process that often disincentivizes investment in biomedical technology and novel treatments. But despite these difficulties, the FDA approval process is a critical mechanism that ensures the products being sent to market are able to effectively carry out their intended function without inflicting any significant side effects.

I urge aspiring investors to continue to look for innovative biomedical research ventures, despite some of the hurdles associated with investing in pharmaceuticals. Investors should look for opportunities that both deliver returns to their firms and partners and life-changing innovations to those desperate for new treatments and procedures.

Venture capitalists are uniquely positioned to push the medical industry to new heights. Plenty of innovative firms are developing the kinds of drugs and firms many of use once regarded as science fiction—they just need entrepreneurial investors to help get them off the ground. While the Russians’ faux COVID vaccine may be little more than a publicity stunt, the hope it elicited has shown just how desperate our world is for a vaccine.

Lessons from the Rideshare Giants

Amit Raizada

September 23, 2020

The state of California and rideshare giants Lyft and Uber engaged in a remarkable display of political brinksmanship last month. As the state moved reclassify rideshare operators from independent contractors to employees, the two firms threatened to shut down their operations in the nation’s most populous state. Just as the firms were about to sever their services, the courts intervened, allowing Lyft and Uber to resume operations as usual while litigation took place.

Politics aside, this saga offers an incisive case study into the ways that firms like these—which were founded initially as startups—impact our daily lives.

As an entrepreneur, venture capitalist, and CEO of Spectrum Business Ventures, I always find it fascinating how innovative startups like Lyft and Uber have developed innovative, novel products that are now societal staples.

Thinking back just a decade ago, the rideshare concept was alien and unthinkable. The idea of catching a ride in a private citizen’s vehicle for a quick trip to the grocery store or a night out at a local restaurant was, for many Americans, frightening at first.

But both firms were able to overcome this initial concern by addressing an acute need in many communities—access to safe, clean, reliable transportation.

Americans needed new ways to get around, and Taxis simply weren’t cutting it. Often expensive and inaccessible, Americans needed access to quicker transportation at a lower price point. As they began to look for options, Uber and Lyft offered solutions.

In many ways, both firms embodied the entrepreneurial mindset that I think is integral to Spectrum Business Venture’s unique approach to investing.

At Spectrum Business Ventures, we have always sought to closely observe emerging market trends and the preferences of young consumers. While ventures of these sorts may not be immediately profitable, we are always willing to accept a loss in the short-term to secure a foothold in the most prolific firms, industries, and products of the long term. Investors in Uber and Lyft did just this—and it’s one of the reasons for which I admire them.

I believe the success of rideshare firms can be boiled down to a few factors. The first was a present need—Americans needed transportation and were hungry for innovations in this age-old sector. Second, was innovation from millenials. Uber and Lyft were able to harness the latest technology to marry transportation with the increasingly prevalent smartphone. By using their iPhones to hail rides, consumers now had a new way to secure taxi-type services for the first time since the advent of the automobile. Third, were innovative venture capitalists, whose foresight identified a problem and developed a solution.

Ridesharing, of course, quickly caught on with younger populations who were more tech-savvy and who were already accustomed to using their phones and the internet to streamline everyday processes. Shrewd investors closely followed emerging market trends, understood the increasing prevalence of personal technology, and realized that the rideshare model—while maybe unorthodox in the moment—could be the way of the future. It was this combination that ushered in a new wave of creative destruction, giving us, the consumers, access to a great new product.

Investing in Health Care: A Once in a Lifetime Opportunity

Amit Raizada

August 21, 2020

The COVID-19 pandemic has prompted a healthcare revolution that could usher in the next wave of biomedical innovation and redefined healthcare investment opportunities. This shift has created a unique opportunity for investors to align capital with transformative medical advancements, ensuring a healthier and more resilient future.

As the CEO of Spectrum Business Ventures —a private equity firm that has been at the forefront of revolutionary trends in biotech, payment processing, real estate, and many other industries—I’ve always sought to use capital as a tool to improve people’s lives.

With more than 150,000 Americans dead at the hands of this virus, healthcare and medical technology are now the sectors in which this philosophy can be most effectively applied.

I urge venture capitalists to seek out innovative and entrepreneurial ventures in two healthcare subfields: preventative health and biotech. Now, more than ever, we need large scale private investment in medical technology to help build a healthcare apparatus capable of withstanding future shocks like the novel coronavirus.

Preventive Health

At one moment, we are witnessing both the most significant stress test our healthcare infrastructure has ever endured, and an unprecedented leap forward in technological innovations. The intersection of these two defining moments will inevitably lead to exponential growth in the healthcare sector.

As we embrace this new reality—a reality in which we understand the true impact a novel virus can have on our world—we are also hyper-aware of the need to establish resources that keep us healthy.

That’s where preventative health comes into play.

Telehealth companies are an interesting new vertical within this field that fit well within the COVID and post-COVID reality. One telehealth company, Livongo (who is now in talks to merge with industry titan Teladoc), is leading the way with a revolutionary platform that helps people with chronic conditions reduce their risk for future diseases with alerts and lifestyle tips based on user data. It also helps organize health reports for doctors, streamline the purchasing of supplies, and connect patients with live coaches.

Companies like Livongo make prudent investments in the post-COVID paradigm, deliver key services to those hungry for innovation, and help mitigate public health concerns before reaching crisis-level proportions.

Biotech

COVID-19 has shown us all just how disruptive a public health emergency can be to our lives and institutions. We must place an emphasis on staying healthy now if we wish to hedge against an unpredictable future. At the same time, biotech companies like Gilead, Moderna, Abbvie, and many others are in a race for what has the potential to be the most profitable vaccine ever created. While the winner of this race has not yet been determined, other companies are undeniably looking toward the next virus, investing in R&D for new drugs that we don’t even know we need yet.

Any time there is an opportunity to invest in, and in turn, catalyze life-changing innovations, I jump at the chance. That’s why I have sought out biotech companies making innovative strides. The COVID-19 virus has awakened a newfound, widespread interest in what these incredible companies do. When a new industry becomes inundated with demand, we can expect an unprecedented influx of capital into that sector. As we saw with tech at the onset of our century, healthcare could very well be the industry that defines the next decade. Don’t miss the chance—this could be the only one in our lifetimes.

Lessons Learned from a Highly Speculative Stock Market

Amit Raizada

July 24, 2020

Lessons Learned from a Highly Speculative Stock Market

The recent price movements in the stock market emphasize the growing relevance of disruptive market investments for savvy investors. These investments have become essential for navigating the global economy's dramatic shifts, offering a unique lens to uncover long-term opportunities through innovation.

Understanding the Shift Toward Disruptive Market Investments

The huge swings up or down can be enticing—even intoxicating—for new investors. Promises of fast money on exaggerated market moves have led to a surge of reckless investing. However, this type of speculative trading often lacks the long-term potential found in disruptive market investments. The difference lies in identifying trends that cater to changing consumer needs, enabling investors to bank on sustainable innovations.

The Age of Robinhood and Immediate Gratification

The popular investing app Robinhood has democratized market access, encouraging a wave of new traders. While this has led to some impressive short-term gains, it has also sparked troubling trends. The allure of options trading and penny stocks often eclipses the long-term value of disruptive market investments. By focusing on companies that innovate and fill market gaps, investors can avoid the pitfalls of speculation and instead build sustainable portfolios.

Case Studies of Disruption: Hertz and Nikola

At the end of May, Hertz declared bankruptcy, but its stock price inexplicably soared by 900 percent due to speculative trading. Similarly, Nikola’s rise and abrupt fall highlight the dangers of jumping onto short-term trends without understanding the fundamentals of disruptive innovation. Investors looking to capitalize on the transformative power of disruptive market investments should focus on ventures that address real-world needs and offer groundbreaking solutions.

The Future of Investing: Focus on Disruption

Investment is more than just a numbers game. By emphasizing disruptive market investments, aspiring investors can tap into ventures that revolutionize industries and provide long-term value. Whether it’s filling voids in the market created by younger generations or delivering cutting-edge technologies, the future belongs to those who can identify and support innovation. Disruption doesn’t just transform industries—it creates opportunities for life-changing returns while positively impacting the world. You can read more about Investment Philosophy here

Millennials and Markets, Part III: Investing in the Source

Amit Raizada

July 6, 2020

In the second article in this series, we looked at how millennials prefer to search for investment opportunities that match their own lived experiences. Likely a consequence of the adverse economic conditions in which they were raised, younger generations have looked to cryptocurrencies as a solution to alleviate some of their economic fears, like inflation and bank failures.

In an economy where cradle-to-grave employment is all but gone and individuals have become accustomed to switching jobs every few years, brand loyalty has been deeply eroded among younger generations. Millennials and Gen Zers tend to support “the little guy,” over the blue-chip, name brands. Eschewing the rigidity inherent in many of these brands, they prefer to work, and invest, on their own time – supporting gig economy firms like Uber and Postmates.

In the final installment of this series, I wanted to face the cornerstone of the millennial capital paradigm – using investment to create social change – head-on. Many young investors have sought out ventures that directly address the societal inequities they hope to redress.

Directly Investing in Social Change

Millennials have long been known to directly invest in social change. Perhaps the most striking example of this was found during the movement for justice after George Floyd’s death. We witnessed the powerful impact of crowdfunding and social organization, allowing young people to leverage their money for social causes they cared about. ActBlue, the Democratic National Committee’s main fundraising wing, saw one of its largest fundraising hauls in the days after the initial protests. Young investors are becoming significant benefactors of nonprofits and advocacy groups, choosing to place their money not into corporations, but into institutions that will drive the change they wish to see in the world.

As a vocal proponent of tolerance, I am incredibly optimistic about the trends in giving that we are witnessing among the younger generations. We are seeing that they are not afraid to give directly to the social causes they care about; And, as technology continues to make the giving process even simpler, we will see millennial support for charitable causes grow exponentially.

Millennials are truly revolutionizing the investment landscape, leading with their values and eschewing all companies, commodities, and causes that don’t align with those values. As I have always said, the secret to investing is really no secret at all: Always keep your finger on the pulse of younger generations’ tendencies and the trends that emerge from them. By keeping this in mind as you make your next investment decision, the upside will be forever in your favor.

Many millennials and young people fell they were dealt a poor hand. To be honest, I can’t say I blame them. But they were also born into a period when consumer technology has taken off, when green energy has challenged the traditional oil barons, and when society has begun to value social awareness over capital gains.

Whether we choose to understand their preferences or not, they are the future of the US economy, and their propensities will dictate whether firms take off or sink for the next fifty years. These preferences, while different from my generation’s, are no mystery. With shrewd observation, venture capitalists can identify these preferences and invest in firms that advance them. The millennial investment wave is coming – it’s up to us whether we get left behind.

If you enjoyed our book series then please check out our Millennials and Markets Parts 1 and 2.

Millennials and Markets, Part II: Currencies and Gigs

Amit Raizada

July 6, 2020

In the first installment of my series on young people and their changing investment habits, we looked at how their “millennial outlook” on investment had been shaped by adverse economic conditions in which many were raised and by a desire to use investment as a strategic tool to drive social change. In that article, we discussed how sustainability is a significant concern among millennial investors, as many seek to patronize innovative green firms like Tesla in lieu of the traditional fossil fuel giants.

But it’s no surprise that climate change and sustainability are important to young people. In this article, I wanted to examine some millennial preferences that are less intuitive to outside investors. In many ways, this mirrors one of my favorite investment strategies – closely observing the preferences of young consumers to gain a foothold in the markets of the future.

Cryptocurrency

Cryptocurrencies like bitcoin, Ethereum, and Litecoin are continuing to gain popularity with millennials. But I believe a deeper, psychological shift is underlying the younger generations’ move to crypto. Many young people experienced the Great Recession in their teens and the COVID-19 pandemic in their twenties, is it any wonder that they’re circumspect about banks?

As the Federal Reserve enacts protocols of “unlimited” quantitative easing – a process where America’s central bank buys assets to pump money into the economy – there is a profound concern about the state of inflation, the dollar, and fiat money in general. If the Fed has the ability to essentially create money out of thin air, what does it mean for the value of our greater economy?

By investing in blockchain technology, investors are putting their money behind a valuable innovation with advantages that look quite enticing against the backdrop of today’s economic woes. By allocating a portion of their portfolio to cryptocurrency, the next generation is essentially hedging against the failings of the global economic system. If economic policy or global unrest causes the collapse of fiat currencies, what will be there to take its place? Cryptocurrency.

It’s important to note that the situation I’m describing is closer to a doomsday scenario than reality, and I wouldn’t necessarily recommend allocating a large sum of money to cryptocurrency. However, as a proponent of diversification, I side with millennials in my belief that crypto has its place in any well-diversified portfolio.

Solo Entrepreneurship / Self-Employment Technologies

Some larger corporations view their employees as expendable, which leads employees to take flight in search of better benefits and pay (I personally think companies need to incorporate a people-first approach into their business model).

With more tools available to nascent entrepreneurs than ever, the next generation of investors is turning to companies that empower the “little guy.” Shopify—an e-commerce platform that offers extensive resources for budding businesses—has seen an incredible resurgence since the crash in March, signaling that investors expect retail stores to increase their online presence (and sales) in the years to come. As barriers to entry are lifted and overhead expenses minimized, small business finds a space to thrive, making Shopify and related services like Square (a mobile payment company) incredibly enticing investment opportunities to the young investor.

As we see millennials make the jump from corporate jobs into self-employment, the gig economy is in full swing. Technological innovation—by way of Uber, Lyft, Grubhub, Instacart, etc.—has afforded people the opportunity to dictate their own hours, pay, and freedom. Younger generations are serious about freedom, and their investments show that.

If you enjoyed our book series then please check out our Millennials and Markets Parts 1 and 3.

Four Books to Read As The Economy Continues to Fluctuate

Amit Raizada

June 22, 2020

Having spent more than two decades as a venture capital executive, many of my friends in other industries often ask me if there are any books on investment and economics that I would recommend to aspiring investors or career professionals looking to spruce up their investment portfolios.

Reading is an excellent way to learn about books on investment and economics. One doesn’t need a Harvard MBA to start observing market trends and placing investments. Reading the right books can often equip an aspiring investor just as well as a course at a leading university.

As we near our fourth month of quarantine and I find myself with more down-time than ever, I decided to compile a list of the books on investment and economics that I find particularly appropriate for those looking to learn about investment.

Here are four selections from my bookshelf that I would recommend to anyone interested in venture capital, business, or even just economics in general.

The Intelligent Investor, by Benjamin Graham

Published in 1949 by Columbia Business School professor Benjamin Graham, The Intelligent Investor is the seminal work on value investing—the investment philosophy that emphasizes purchasing shares in companies that are undervalued by the market.

Value investing involves buying stocks in companies that, while sound in practice and in leadership, are experiencing some kind of downswing.

Patience is the key to successfully integrating value investing into your portfolio. Successful value investors look for undervalued companies with a plethora of upside, buy stock, and hold onto that stock until things begin to turn around.

Value investing is one of Warren Buffet’s key strategies, and he often credits Benjamin Graham for having developed the theory. This is why it is among the top books on investment and economics for any serious investor.

Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets, by Nassim Taleb

Finance is complex; and the best way to become a shrewd investor is to consider the myriad different academic disciplines and theories that the field encompasses. Fooled by Randomness, which concerns primarily the statistical and psychological facets of randomness, is a great example.

Taleb argues that the world is far more random than we perceive it to be. Sometimes the models and data upon which many investors depend can be impugned by little more than pure random chance.

I like to consider this when thinking about my signature investment strategy – looking toward the markets of the future. By closely watching emerging market trends and the preferences of young investors, I can help insulate my portfolio against randomness not accounted for in many forecasts.

Taleb’s work forces investors to consider the roles data science and psychology play in investment – critical for finding success in this field. It’s one of the must-read books on investment and economics for its insight into market unpredictability.

The Little Book of Common Sense Investing, by John C. Bogle

Written by John Bogle, the late founder and CEO of Vanguard, The Little Book of Common Sense urges aspiring investors to place their money into index funds.

Index funds, he says, are low risk, low cost, and track with the markets writ large. By investing in an index fund, your returns will mirror those of the index as a whole, rather than falling victim to the booms and busts of one unique stock.

Picking individual stocks can be arduous and time-consuming. Choosing an index fund means you won’t have to worry about shorting the market – just invest your money and let the S&P do all the work.

In many ways, this is an ideal strategy for a first-time investor or a recent college student. That’s what makes it one of the easiest-to-understand books on investment and economics for beginners.

Capitalism, Socialism, and Democracy, by Joseph Schumpeter

Another post-war investment classic, this book resonates with me for a different reason than what the title suggests. An economist and political scientist, Schumpeter devotes portions to explaining the differences between capitalism and socialism, but I prefer the second half, where he introduces his famed theory of creative destruction.

Creative destruction, he argues, is all about what we today call, “disruption.” Schumpeter holds that technological innovation stemming from entrepreneurs disrupts markets and destroys traditional monopolies, giving way to new firms that take over and reshape the field.

Some of today’s major tech firms, like Google, Amazon, and Netflix, began as startups with an innovative new idea that transformed the tech industry, forcing out the established firms like AOL or Blockbuster, and giving life to new verticals like streaming and on-demand online shopping.

This fits perfectly with my investment strategy of seeking cutting-edge ventures that offer footholds in the future of the economy. Investors should keep Schumpeter’s wisdom in mind when looking for opportunities. Which firms will be the one to dethrone some of today’s industry leaders?

Learning From Failure

Amit Raizada

April 17, 2020

There hasn’t been a lot of positive economics or business news lately. Between the millions filing for unemployment and the jaw-dropping daily losses on the Dow, many of hard-working Americans are ailing.

As a venture capitalist who’s spent much of my career investing in innovative startup ventures, what pains me most about this situation is knowing that the COVID-19-born economic downturn will prove fatal to many small businesses and newly minted firms. Innovative entrepreneurs who’ve worked hard and played by the rules will fail at the hands of the epidemic and its recessionary wake.

Yet, I urge entrepreneurs not to give up hope. After two decades in the VC business, I’ve come to realize that, in the eyes of an investor, past failures act more like prerequisites than disqualifiers. While I’d never encourage entrepreneurs to take uncalculated risks, every successful businessman has failed at some point. In many ways, failure is inseparable from the process of innovation.

There are ways, however, to fail and how not to fail. Be graceful, acknowledge defeat and look toward the future. Don’t chastise business partners or burn bridges.

Here are some of my tips on how to fail right and how to parlay failure into future success.

Own it and Learn from It

People often react to failure by simply shutting down. They block it out of their heads, refusing to think about what happened or to analyze what went wrong.

But a successful entrepreneur looks for the opportunity in failure. While losing a business is always heartbreaking, stepping away and refusing to conduct a postmortem will just make the situation worse. If you’re going to fail, you might as well own it and use it as an opportunity to examine what went wrong, what you did well, and how you can adjust your model for the future.

Owning failure is also key to preserving relationships with business partners and investors. Sure, it didn’t work out this time; but that doesn’t mean you’re consigned to failure in all future ventures. Your partners today could be your partners or investors down the line. Never unnecessarily burn a bridge.

Don’t Hide it from Future Investors

Just as you should be forgiving of your current partners, you should be forthcoming about your failed venture with future investors.

The conventional wisdom is that failure is a good way to get yourself blacklisted with venture capitalists. Reality, though, couldn’t be further from the truth.

While venture capitalists always engage innovators with proven track records of success, that true innovation is a process and the best strategic partners are those who have experienced—and learned from—past failures.

Think about it this way:

All entrepreneurs have failed at some point. But if you’ve failed in the past and have learned from your mistakes, the odds are slim that you’ll repeat those same missteps should I invest in your company – which puts my mind at ease.

What you shouldn’t do is cover up your failed former venture. Just be honest. You won’t scare investors away, rather, you may just attract them.

Warehouses: Flashy? No. Lucrative? You bet.

Amit Raizada

April 9, 2020

At first glance, warehouses aren’t as exciting as some of the companies and products in which Spectrum Business Ventures has invested. They’re not as thrilling as Terran Orbital, which launches satellites into orbit, or as delicious as Tocaya Organica, which serves healthy, fast-casual Mexican cuisine at locations across Southern California. Yet, warehouses can prove to be lucrative investments that venture capitalists should seek out in 2020.

Online retailers like Amazon, which brought in $600 billion in sales in 2019, are quickly displacing shopping malls and big-box department stores as Americans’ favorite venues for consumption. This new trend has given way to a seismic shift in the commercial real estate landscape. Once regarded as low-risk, low-reward investments, warehouse space has become a valuable commodity. According to a recent report by CNBC, demand for warehouse space – driven largely by online retailers – has outstripped supply by nearly 170 million square feet. This disconnect between supply and demand creates a lucrative opportunity for aspiring investors.

Here are five reasons that SBV sought to aggressively invest in warehouse space.

1. Online retail is growing fast

The online retail market isn’t just a fluke. According to a report by Smart Insights, the industry is forecasted to expand by 19% in 2020, an astronomical rate of growth.

This didn’t come as a surprise to the Spectrum Business Ventures team.

Spectrum Business Ventures predicates much of its investment strategy on observing the preferences of young consumers. Millennials and Gen Z they like convenience, and as they begin to encompass a wider swath of the economy, SBV intuited that convenience-based online shopping would continue to grow.

These online retailers need somewhere to store their inventory – and that somewhere is warehouses. As online shopping grows, so will demand for new warehouse space.

2. Online retailers need warehouses for ambitious same-day shipping programs

Online shopping has brought about an interesting paradox: as retailers like Amazon take unprecedented steps to offer consumers faster delivery, consumers respond by simply demanding more convenience. In a bid to satisfy this desire, Amazon has begun to expand its same-day shipping offerings.

As next-day, and increasingly even same-day, shipping gradually becomes the norm, Amazon and other online retailers and fulfillers will be under immense pressure to live up to their end of this ambitious bargain. Warehouses are the keystone of this shift in business to consumer delivery.

3. The warehouse supply shock

The rules of supply and demand are simple – when there is a limited supply of a product that is in demand, the value of that product goes up. This is very much the case with warehouses.

As CNBC reported, retailers are demanding 170 million more square feet of warehouse space than what can currently be supplied. Online sellers need this space to continue to drive their precipitous growth, and they’ll be willing to pay for it. Aspiring investors should take advantage of this disconnect between supply and demand and of the high value per square-foot that it will create.

There is some urgency, though. Supply will eventually catch up; and now is the time to get into the market.

4. Warehouse space can be innovative

Warehouse space may not seem as flashy as tech or entertainment, but the industry is still ripe for innovation.

One way that investors can innovate is by looking for warehouse space in the immediate vicinity of major airports and transit hubs. A location where companies can easily store goods without having to incur hefty shipping costs is ideal for major online retailers.

5. Invest in the markets of the future

At Spectrum Business Ventures we strive to see the world differently, and we always look for opportunities in the markets that will define the future of consumption. Ideas, products, and firms that may seem outlandish in 2020 could be economic mainstays by 2030.

It is important that investors look for cutting-edge new markets and technologies, but that they also look for the peripheral opportunities that result from these new markets. Warehouse space is one of these peripheral markets – it’s a way that investors can get into the online shopping market without having to compete directly with Amazon.