Our team has put together 10 key industries that are likely to be the major investment focus from venture capital; private equity funds in 2012.
More Cleantech
Cleantech will remain as a focus for investments for 2012, although, many investors have expressed they will be more investing in existing / proven technologies or invest in companies that are looking for commercialization.
It is also likely to be a year of mergers & acquisitions for the cleantech & renewable energy industries, private equity will likely to participate in these deals – by funding existing cleantech company to make acquisitions into emerging cleantech companies. Similar strategies are also being planned by the energy companies.
Medical Devices and E-Health
The medical sector had reported a very strong investment period in 2011 and this is likely to continue into 2012. Medical devices & e-health applications are regarded as the most sought-after sectors due to their lower-risk nature, as well as increasing demand from governments worldwide and better telecommunications infrastructure to support E-health applications that were previously unserviceable.
Commercial Real Estate in United States
There are good signs across the United States that the real estate sector is recovering. The commercial real estate sector has already recovered strongly since 2010, especially around the major commercial hubs of the USA.
Private equity firms and real estate firms have been setting up new funds or co-invest into other groups to acquire commercial properties, as vacancy rate has started to drop in key cities, these provide consistent returns for investors that are seeking stable returns.
Agriculture and Primary Goods
Venture capital firms don’t just invest in high-tech opportunities. Agriculture & primary goods including other natural resources had enjoyed very good years in 2010 and 2011.
Agriculture companies are likely to expand their operations due to the significant increase for food worldwide, with price for commodities continue to rise across the world. North America has a very good chance to capitalize in this trend better than others as long as it does not have unpredictable turbulent weather conditions.
Robotics
Robotics is now a well-advanced industry particularly in the United States, Japan and Germany. There had been some significant break-through in the development and applications of robotics industry.
The trend in moving into consumer products and medical industries have opened up new opportunities for companies; and this is exactly why many venture capital firms are showing increasing interest in this future industry.
New Telecommunications Services
Introduction of 4G has just started; there will also be opportunities for new infrastructure networks to be rolled out. We expect 4G will create the same impact as when 3G was rolled out. New network operators will emerge, new service providers will emerge and new technologies will also emerge.
Investments will occur at different sectors and opportunities. For established markets like the US, investments will be mainly in applications and new services; whereas for emerging markets, significant investments will be made into network infrastructure and also fixed assets such as Internet Data Centers.
Manufacturing Businesses in the US
Boston Consulting Group (BCG) published an article called “The Renaissance of US Manufacturing” in 2011 which we shared with you and totally agree. In December 2011 alone, I have heard 3 Chinese companies just in my personal network that they are setting up new manufacturing plants in US in 2012.
Many Americans can not comprehend this move, as this is the complete reversal of what have seen over the past 20 years. Chinese companies mention that rising labor cost, transportation costs and raw materials; as well as currency fluctuations make sense for them to set up manufacturing plants in the US servicing US customers.
In addition, US made products are much more acceptable by the US customers even if they are owned by the Chinese or overseas parent company.
This creates an interesting investment trend for 2012, we would expect Asian manufacturers and investment funds make further acquisitions or mergers with American manufacturers in 2012; which is already happening in 2011.
Retail and Franchising
Retails and franchising opportunities are rising globally because of the emergence of new middle-class consumers from China, India and Latin America. The rising middle-class Latin American consumers is particular a good news for North America because of the proximity.
Venture capital investors like retail companies and franchising opportunities, as they are easy to understand, and they are able to expand very rapidly into a global business especially for franchising.
Unlike technology and other high-growth industries, retail companies do not have the same development or technical risk. Some VCs have mentioned they prefer to invest in West Coast or East Coast retailers for them to expand into the higher growth southern states, some Canadian VCs are buying US retailers and merge with their portfolio companies to create bigger groups as well.
European VCs are particularly active in these industries, especially the high end and luxury goods – led by French, Italian and UK venture capital firms. Some firms are also seeking to do IPO either in the US or Hong Kong in 2012, which will provide new funds for these venture capital investors to participate in new deals.
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