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.

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.