What businesses will investors be looking out for in 2021?

Portugal Ventures asked its Ignition Capital partners Lurdes Gramaxo, partner at Bynd, Gonçalo Sousa Coutinho, Director at HCapital, and Hugo Gonçalves Pereira, partner at Shilling Capital Partners, what areas they believe will pique the interests of Portuguese investors.

According to Lurdes Gramaxo, partner at Bynd: “We are nearing the end of year that was very challenging for everyone, and also for venture capital. Besides having to adjust our ‘modus operandi’, which we were forced to do, Bynd VC continued to pursue early-stage investments, certain that the progressive digitalization of the economy is an irreversible trend and that the tech-based startups in which we invest play an important role in leveraging this change. At the end of 2019, we launched our new BA VF fund, which, in 2020, achieved the investment goals we had set. We have been keeping an eye on the changes the pandemic has introduced and some trends are here to stay, such as the diversification of e-Commerce models, which has been stepped up and will gain increasingly more ground over more traditional consumption habits. The healthcare sector is also moving towards digitalization, with new solutions for remote consultation, personalised diagnosis and predictive medicine, bringing obvious economic advantages without compromising quality and efficiency. Proof that teleworking is effective will see companies find new ways to organise themselves, and the positive experience of remote business meetings will have a significant impact on traditional ways of doing business. Finally, we believe that the education sector will also introduce more IT-driven models.

Gonçalo Sousa Coutinho is confident of HCapital’s direction this year: “In spite of the challenges that 2020 posed, HCapital did not deviate from the path it outlined for its HCapital New Ideas Fund, a venture capital fund that invests in innovative companies in the areas of energy, smart cities, connectivity, and technologies to improve industrial processes. While aware of the short-term negative impacts, HCapital is confident that, given the increasing ‘digitalization’ of the economy, the value proposition of the technological solutions in which it is investing will be strengthened. Accordingly, infrastructural areas such as new data processing and storage technologies, improved information security and flow (including cloud based solutions, cybersecurity, etc.), data analytics, and, above all, artificial intelligence-based solutions will benefit from strong business demand. Moreover, and driven by the need to accelerate the transition to a more sustainable, low-carbon economy, technologies that enable energy efficiency and energy intensity reduction can be a winning solution. This category includes storage technologies and management solutions for new paradigms in the electricity sector (such as decentralised production, distributed energy resources, flexibility, the electrification of mobility, etc.).

Hugo Gonçalves Pereira, partner at Shilling Capital Partners believes “this crisis has helped to highlight the crucial role technology plays in society and the economy, whether to aid in efforts to manage the health response during the pandemic or to help companies maintain productivity even during lockdown. Accordingly, we have seen an uptake in digital solutions in healthcare (e.g. telemedicine), mobility (e.g. deliveries), and in companies in general (e.g. collaboration tools). This just strengthens the momentum of the trends Shilling identified and its support of entrepreneurs over the past decade. Data privacy, the future of work, the digitalization of healthcare, and the expansion of financial services based on banking data (PSD2), as well as workflow automation and the digital transformation of companies, through machine learning and artificial intelligence solutions, are the trends to look out for in 2021”.

For Lurdes Gramaxo, the biggest opportunities in the coming years are closely linked to all forms of automation and digitalization of production processes, in what is commonly referred to as Industry 4.0, and to the increased use of collaborative software and HR tech solutions. Consumption will see an uptake in contactless solutions and an increased use of Cloud Kitchens and Dark Stores, and more Digital Native Vertical Brands and fulfilment solutions will emerge in e-Commerce. Trends in the digitalization of processes in the healthcare industry will generate new telehealth and mental health models, and offer more Edtech solutions in the Education sector. In a globalised and increasingly digitised world, cybersecurity will also gain added importance.

“The growing importance of new remote engagement and collaboration models and the need to ‘virtualise’ real-world environments,” are also an opportunity to explore, according to Gonçalo Sousa Coutinho. “In this regard, we believe that Digital Twin, augmented reality and/or virtual solutions and technologies that streamline industrial management processes, facilitate remote access to information, and promote more efficient forms of collaboration will undoubtedly become essential. HCapital is, therefore, moderately optimistic for 2021, and continues to believe that, when everything starts getting back to normal, new opportunities will emerge as a result of the structural transformations that times of crisis like these typically bring about.”

Hugo Gonçalves Pereira points out that B2B will be the business opportunity with the greatest growth potential, “Historically, the focus has been on B2C trade, a more top-of-mind model in which we, as consumers, benefit from companies like Amazon, Shopify and Stripe every day. But the B2B market, which is still largely offline, offers a tremendous opportunity ($100T+). And as the first generations of successful founders complete their virtuous cycles, we hope to see more opportunities in the B2B space in the future. Portugal has proven that it can produce leaders in categories such as e-Commerce (Famphetch), low code (Outsystems) and translation (Unbabel). And we believe the stage is set for new leaders, given the diverse ecosystem (great national and international talent), cost/quality of life, and the growing support of private and public funds”.