Restaurants: A Year in Review

Amit Raizada

December 27, 2020

In my more than twenty years as a venture capitalist and entrepreneur, I’ve always felt a strong affinity for the restaurant industry. I’m a foodie at heart, and I love being able to back the ventures that help share the wonders of food with the world.

Restaurants have always comprised a significant portion of my investment portfolio—and, as such, I write a lot about the industry. Back in February, I wrote an article about developing successful restaurants in which I stated that restaurants should work to cultivate a unique atmosphere and embody a certain energy.

Wow—to think how much has changed in the last ten months! Little did I know that no less than a month after writing that piece, restaurants around the country would be asked to close their doors upon the coronavirus’ arrival in the United States. Little did I know that most of these restaurants would go months without accommodating a single dine-in customer, that proprietors would need to devise a wholesale transition to patio dining just to stay afloat, and that millions of hospitality workers would soon lose their jobs.

The restaurant industry has been turned upside down in the time since I wrote that piece.

Now, restauranteurs and investors are constrained by a national patchwork of regulations and restrictions. In some states, restaurants are operating almost as normal. In others, like California—one of the nation’s culinary capitals—restaurateurs have been on a rollercoaster ride.

After only being permitted to offer take-out dining in the spring, most restaurants were able to accommodate outdoor dining during the summer months. Proprietors spent large sums of money on tarps, decks, and furniture to build attractive outdoor patios for diners. In late November, amid a nationwide surge in cases, outdoor dining was shuttered across the Golden State, leaving restaurants to pivot back to take-out only models.

As this troublesome year winds down, I wanted to share a few thoughts I’ve had about the restaurant industry, where it’s been, where it’s going, and how it can make the most of this inauspicious situation.

FOCUS WHAT YOU CAN DO

The COVID-19 pandemic has significantly constrained restaurants’ ability to operate in a normal capacity. While many of these restrictions are necessary to slow the spread of the virus and ultimately save lives, it benefits restaurateurs to focus less on what they cannot do and more on ways to maximize what they can still do.

In states like California, the answer may be that restaurants are only permitted to fulfill take-out or to-go orders. In other markets, restaurants may be able to accommodate the public on outdoor patios. Whatever the restrictions in your municipality may be, discern which functions are still permissible and leverage those to the best of your ability.

CREATE NOVELTY

In earlier iterations of my musings on restaurants, I wrote that proprietors should focus on cultivating within their establishment a unique and trendy atmosphere that transforms dining at your restaurant into a sharable, unique experience.

While new restrictions have recharted the ways in which this is possible, I encourage restaurateurs to figure out how to make eating at their establishments feel like a novelty—and something worth sharing with family and friends—during the pandemic.

This could involve a pivot in service or recalibrating your cuisine to better meet the needs of a pandemic era-crowd. Developing ambiance during a pandemic is far easier said than done, but must nonetheless be a priority for restaurants adapting to this era of uncertainty.

THINGS WILL GET BETTER

I know that the last thing any struggling restauranteur wants to hear during these trying times is a platitude, but with the Pfizer and Moderna vaccines already being administered to the public, the restaurant industry looks ripe for a resurgence at some point in 2021.

When the clock struck midnight last January 1, no one could have foreseen the struggle and discord the proceeding 364 days would have in store for our society, the boom to Zoom & at home fitness companies like Peloton, and our country. But we’re here now, vaccines are on their way—keep your heads up.

Streamlining employee onboardings during ad post COVID-19

Amit Raizada

December 10, 2020

Employee onboarding strategies have become a peculiarity of the COVID-era office place. Hired and trained over Zoom while the rest of the office works from home, these employees are now commonplace on work teams across the country. While many have quickly become impactful members of their organizations—and many others deeply embedded into their companies’ workflow and ethos—challenges exist in integrating these employees into extant company processes and cultures.

For many firms, employee onboarding strategies take up a significant degree of time and energy. Many companies’ internal processes, procedures, and software were not designed to be taught over Zoom, leaving virtual employees feeling frustrated and demotivated during their first few weeks at work. For teams, it often feels paradoxical despite being in contact with new hires every day over Zoom and email, they remain relative strangers.

With COVID-19 cases increasing in states across the country, these challenges will likely persist well into the new year. Below, based on my experience running Spectrum Business Ventures, I’ll share insights and employee onboarding strategies businesses can use to smooth the process and improve new hire experiences.

Enhanced Onboarding

When it comes to onboarding employees during the work-from-home era, the traditional “sink or swim” model is simply obsolete.

“Working from home, while necessary to reduce the spread of COVID-19, effectively places your entire team into silos”. “To effectively onboard a new employee, management must first acknowledge this fact and accept that, without a proactive and integrative onboarding process, new hires will struggle to learn your company’s ethos.”

One of the most effective employee onboarding strategies is to frontload onboarding sessions into the new hire’s first few days with the company. By doing so, hires will be presented with their full range of responsibilities up-front, affording them time to learn and follow up with inquiries.

Most importantly, management should cut new hires some slack.

“Joining a new company, even one that you love, always involves a period of transition and adaptation. The pandemic makes this markedly more difficult,” he said. “But incorporating new hires into your team is as much a mental game as it is a logistical one. Reassure your new team members that they are adapting well. Be amiable and generous with your time—they will respect you immensely for it.”

Utilize your team

Effective employee onboarding strategies do not need to rely solely on management. Instead, experienced employees should also play a role in helping new hires integrate. Often, these employees already handle myriad tasks for their companies, and leaning on them for support with onboarding can be helpful to all parties involved.

I recommend asking key members of your team to block out “office hours” for new hires, in which they can pose any questions, comments, or observations they may have.

“This builds an important sense of camaraderie between teammates, which is integral to running a successful venture. For one, it gives your team an opportunity to interact and to build trust and connections. It also helps your new, virtual hires learn more about the company from the individuals conducting its day-to-day business.”

The best way to learn about a company, Raizada said, is to speak directly with those who have the most experience driving forward daily tasks in a safe, non-judgmental setting.

“Many of your veteran teammates are experienced in navigating onboarding processes and can answer specific questions—work-related or otherwise—that the new hire may have,” he said. “It’s a win-win.”

Amit Raizada's Bookshelf, Part II

Amit Raizada

November 4, 2020

Just four months ago, I published an article on this very same blog detailing the books that have helped shape my investment philosophy. Since that time, the world has changed inexorably. Wildfires and hurricanes have ravaged large swaths of the country, protests against racial inequities have sparked a national conversation reckoning, and the coronavirus continues to kill Americans.

Economically, we have experienced both highs and lows. The stock market has oscillated between the bull and the bear, ultimately siding with the former. Congress has balked at the prospect of passing another fiscal stimulus package. Businesses around the country remain closed entirely or operating under significant restrictions.

Aspiring investors are facing a gauntlet.

As CEO and Founder of Spectrum Business Ventures, though, I’ve always sought to see the world differently, to discover lucrative ventures stepped in innovation where others see losses. During this difficult time, I strenuously encourage aspiring investors to think similarly.

As I’ve said before, one does not need an MBA from Wharton or Harvard to find success in venture capital and investing. Often, the most successful investors hone their philosophies and approaches by combining the lessons they’ve learned in the classroom with those derived from real life, hands-on experience. This list aims to help give you the first part of the equation. Equipped with new strategies and shifted mindsets, it’s up to you to put the second component into motion.

Think and Grow Rich by Napoleon Hill

Napoleon Hill published his magnum opus during the Great Depression. With millions of Americans out of work, his work—unfortunately—takes on a new resonance when read under these current conditions.

Inspired by his conversations with legendary entrepreneur Andrew Carnegie, Hill’s book propounds a series of principles, which he dubs “laws,” that induce success and invite prosperity. Hill argues that maintaining a positive mindset, defined by perseverance and desire, creates a positive feedback loop that begets success.

I’ve always sought to advance a similar philosophy. Shrewd investments are the result of a mental acuity spurred by measured confidence and determination. Mindset is integral to investment. Hill got this right more than 80 years ago, it’s time for us to apply it now.

Tools of the Titans by Timothy Ferriss

Sometimes, to join the best, you have to learn from the best.

That’s exactly what New York Times bestselling author Timothy Ferriss seeks to do in Tools of the Titans, a collection of wisdom derived from his more than 200 interviews with the world’s leading business, athletic, political, and artistic minds. In taking these lessons from the globe’s luminaries, Ferriss attempts to distill the essence of success.

I urge aspiring investors to closely read this work and evaluate how they can apply these principles to their pursuit of innovative, profitable ventures.

The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution by Gregory Zuckerman

Zuckerman’s book is another masterclass in learning from the best. Lauded by the Financial Times, The Man Who Solved the Market examines the rise of Jim Simons, the multibillionaire Wall Street financier who perennially delivers unthinkably high returns to his investors.

Zuckerman looks at how Simons’ background in mathematics helped him see opportunities and ventures differently. This mirrors the approach we employ at Spectrum Business Ventures, where we strive to invest in innovative opportunities in nascent markets. Like Simons, we believe in closely monitoring data and emerging market trends to gain footholds in the markets of the future.

With so much going on in the world, I find it comforting to turn to wisdom and ideas for some respite. I hope aspiring investors will take these recommendations to heart and seek ways to imbue their investment philosophies with the many great strategies, lessons, and outlooks articulated by these authors.

If you enjoyed our book series then please check out our Millennial's and Markets Parts 1,2,3.

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 the Personal Fitness Industry

Amit Raizada

August 19, 2020

Over the years, I’ve come to view the gym as something of a sanctuary. After a long day at the office, it always feels liberating to lift some weights, take a spin class, or go for a run.

 

But like many fitness enthusiasts, my daily workout routine changed drastically in mid-March, when gyms and workout facilities across much of the country were ordered to close amid COVID-19 stay-at-home orders. For the most part, gyms—which make up a $30 billion annual industry in the US—have remained shuttered, and individuals have been forced to devise new ways to get their daily workouts.

 

With thousands of gyms around the country closed for the indefinite future, there exists a significant opportunity to disrupt the personal fitness industry. As an investor, I’ve always been an advocate for creative destruction—the process of discovering innovative, new ventures that revolutionize and inexorably change well-established markets. As consumers increasingly turn to personal exercise equipment and supplements as substitutes for traditional gym experiences, aspiring investors should consider how they can enter this burgeoning new market.

 

From fitness tech to nutrition products, these case studies will help aspiring venture capitalists think critically about where to seek innovative opportunities in this new vertical.  

 

Fitness Tech

 

I’ve always maintained that effective investors should look for ways to revolutionize and existing markets—and that’s exactly the effect that the proliferation of tech has had on the fitness industry over the last decade.

 

Take Peloton, for example. Stationary bikes are nothing new—they have been a gym staple for decades. But Peloton has devised a way to marry this time-honored piece of equipment with the latest technology. Pairing their stationary bikes with Wi-Fi and LED monitors, Peloton offers hundreds of live-streamed fitness classes in which users can interface with trainers and compete with other athletes from around the world—all without having to leave their homes.

 

This model propelled the company to a nearly $1 billion revenue haul in 2019.

 

Peloton—literally speaking—did not have to reinvent the wheel to achieve such success, it merely had to reformulate an extant product for a changing market. I advise investors to look for firms that integrate up-to-date tech into fitness products that can easily and efficiently be deployed from home.

 

Refueling

 

Proper nutrition is essential to staying fit, and as Americans increasingly turn to exercise as a method to cure quarantine boredom, demand for high-quality nutrition products will almost certainly increase.

 

Aspiring venture capitalists should consider ways to tailor this demand to better meet the preferences of young people, an especially health-conscious cohort that generally avoids products high in sugar, carbs, and fat. Ventures that makes inroads with Millennials and Gen Z—the consumers of the future—could well be the firms that will define the direction of the economy in ten or twenty years.

 

With this in mind, I invested in TuMe Water a couple of years ago. TuMe offers a range of hydration products that inject turmeric into water, offering consumers an easy, appealing way to incorporate the herb into their daily diets.

 

Venture capitalists should look for similar opportunities that leverage the ever-growing demand for post-workout refueling products and nascent consumption trends to develop a winning product.

 

Space

 

With the protracted closure of gyms, many Americans have taken matters into their own hands, purchasing weights, bench presses, and even Pelotons for their own personal gyms. But many taking this approach have run into a similar problem—space.

 

Those who live in high-density, urban areas often lack the requisite square footage in their apartments or condos to store their home gym equipment. This often becomes a limiting factor.

 

Aspiring investors should seek out about strategic ventures aimed at mitigating this issue. With myriad new technologies at hand and a corresponding demand now sweeping the country, innovative entrepreneurs will likely seek out high-quality models to store equipment and maximize exercise space. Will you be there to help?

It’s time to diversify your investments

Amit Raizada

May 20, 2020

The novel coronavirus has given way to some unusual business and economic headlines over the last two months. A rollercoaster couple of months for the stock market. Speculation of an impending housing or rent crisis. The possibility that Jeff Bezos may become the first trillionaire due to Amazon’s surge in revenue.

 

Yet, perhaps nothing was more unexpected than last month’s precipitous drop in oil prices. In late April, overproduction and decreased demand caused the per barrel price of crude oil (for contracts to be delivered in May) to slip below $0. Investors on both the macro and micro-scale, from the governments of Saudi Arabia and Russia to small local capitalists, were left reeling as their petroleum assets lost literally all their value overnight.

 

While prices somewhat recovered in May, this episode illustrated a crucial concept in investment that all prospective venture capitalists should consider: diversification.  

 

Diversifying your portfolio and investing in a plurality of industries can be an effective insurance policy against wholesale financial ruin when the economy begins to contract. When your money is spread across a multitude of sectors, rather than concentrated in one narrow market, odds are that at least some of your assets will stay above water when a recession hits. The more diverse your portfolio, the greater the odds your assets will continue to perform.

 

A shrewd investor should never, as the old saying goes, place all your eggs in one basket. I spend a lot of time considering many scenarios, but I had not factored in a global pandemic. Diversification helps protect against both the known and unknown.

 

Here are some of my strategies to help you diversify your portfolio.

 

1. Follow emerging trends, they’ll lead you in new directions

 

Diversifying your portfolio can often be a difficult task. While every investor wants a diversified set of assets, finding new industries in which to place your resources is often challenging.

 

An innovative way to go about this, though, is to follow emerging market trends. In my case, I often look toward the consumer products and experiences in which my kids demonstrate an interest. I use their preferences to help craft long-term investment strategies that pursue the products and experiences that will dominate the market in the coming decades.

 

This approach leads me in directions I would’ve never expected. A decade ago, I never imagined that I would have been invested in online video gaming or in fast-casual restaurants like Tocaya Organica. But by following nascent investment trends – and the things kids like to do or eat – I was led to two lucrative ventures that helped further spread out my portfolio.

 

You can follow suit simply by closely watching consumer trends – particularly those of future generations.

 

2. Take risks in pursuit of bold ideas

 

Investors can always diversify their portfolios by taking some calculated risks.

 

This could mean investing in a startup with an innovative new product that may not be profitable in the short-run. It could mean looking for investment opportunities overseas or in products that may face regulatory hurdles.

 

At my firm Spectrum Business Ventures, we strive to see the world differently. We look for investments in ventures that others overlook, we look for opportunity where others see none. And to do so we take risks – calculated risks.

 

When it comes to diversity, these risks often take us into uncharted territory. They’ve propelled us into rocket and satellite technology firms, biomedical R&D companies, novel restaurant and entertainment models, innovative consumer shopping technologies and improbable real estate acquisitions. Above all, though, our pursuit of cutting-edge innovation has broadened SBV’s portfolio.

 

Aspiring investors should do the same. Take smart risks in pursuit of bold new products or industries. You’ll end up with a well-rounded, diverse portfolio that has invested your money across a spectrum of industries, ensuring that you’ll have some cushion the next time we hit an economic bump in the road.

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.