The challenges of investing in the new normal.

The new normal – we’ve heard this! Just like people have had to adjust to the new normal, so have businesses – even more so. More and more…

May 7, 2022

The new normal – we’ve heard this! Just like people have had to adjust to the new normal, so have businesses – even more so. More and more brick and mortar businesses realized very fast that they will go out of business if they didn’t come up with a solid digital strategy. This sudden need created many doors to new businesses and as a results new tech and digital startups and founders erupted overnight.
Digital startups such as Zoom, suddenly shot to success and similar digital startups erupted to the new needs brought in by the new normal. Whilst at the beginning startups were worried about staying afloat, they soon realized that this was a big opportunity. Businesses that understood this new concept and the importance of digital and tech-oriented startups would have and mapped their business model accordingly, were soon getting noticed and traction.
Investors are also keeping their eyes open. Those who previously looked at traditional startups with physical presence were soon realizing the importance of learning about digital and tech startups. And more and more digital and tech startups were realizing that they can come up with an idea and an MVP with minimum funding, due to the many free tools and products available over the internet.
This whole change of mindset by both consumers and businesses has created opportunities as well as challenges for investors.

Whilst it is great to see the booming digital and tech industry, as investors it is important to study the business landscape, consumer behaviour changes and even in digital and tech what works and what doesn’t.

Go with the trend or not?

As an investor, especially new to the digital and tech space, the statistics may seem very lucrative and good business sense. However, before you jump into an investment there are many areas to consider. Yes, the new normal has created new opportunities with the shift of minds among consumers, however, even with digital and tech, startups must display their position in the market and their capability to sustain over time.
As previous pandemics have shown us, a pandemic state of mind shifts after several years and may even be much faster than anticipated. Hence, the startup you’re investing in must have an idea, product or service that can last the test of time and have a sustainable business model in place.

Valuations that are HIGH
With digitization being the future, more and more investors are realizing the value of investing in tech and digital startups. This has suddenly given startups in this space more traction, thus value. As a result, investors find themselves with startups with a higher valuation than prior to pandemics.
This could prove to be challenging! Again, if it is an idea phase or early-stage startup, it might not have reached a level of proper consumer validation to predict the value it can reach. However, with tech and digital startups, investors know that your money is made at the beginning not later. With such unpredictability, how can investors make the right investment decisions?
The simple answer is to be realistic. Gather enough evidence that can show the sustainability of the startup idea and very importantly it must be an idea, product or service that makes sense to you.
If the idea itself, doesn’t make sense and looks like a great opportunity with little information or statistics to back it up, then as you would with any startup investment, navigate carefully.
Tech and digital startups have a good potential to succeed and make the investors a good return. At the same time they, like any other startup, have the potential to turn flat, if due diligence and customer studies have not been carried out. Whatever, the risk may be, it is certain that digital and tech is the way of the future and startups that adapt their business model to fit that will be the ones to look out for in the year to come.