Thinking of investing into early-stage businesses this year? You’re not alone. 2017 saw a record number of deals being made, and it looks as though that trend is set to continue in 2018. More and more people are considering investing into equity deals, in order to make their money work harder for them. As the financial year draws to a close, people also look to investment in order to reduce the amount of tax they pay. Investment incentives such as EIS/SEIS tax relief make this idea more appealing. If you’re considering investment, but aren’t sure what sectors to invest in, check out our thoughts about investment trends for 2018.
Fintech
Fintech (Financial Technology) has been on the rise for the last couple of years, and that trend doesn’t look like it’s going to slow down any time soon. Fintech is the leading sector for venture capital in the UK, meaning that larger investment firms and big-scale investors are continuing to pump money into it. While injecting funds into a sector does not necessarily guarantee its success, Fintech is generating a lot of money, and becoming more integrated into our daily lives.
The pre-internet methods of monitoring and maintaining finances are becoming out-dated, so the need for Fintech is becoming increasingly high. Many banks now have mobile applications which allow customers to control finances from their phones, and there has also been a rise in the number of independent banking systems.
With the Fintech sector frequently dominating the news, it is likely that we will see a continuation in the number of investments into the sector this year and beyond.
Education
The way that we learn is changing. As we become more aware of how the mind absorbs information, we are realising that each person has their individual way of learning. This means that alterations are being made to the way we teach.
While mainstream education will still play a significant part, there has been major developments in education technology (EdTech). People are now able to access myriad of online courses in almost every subject imaginable, to help them learn different skills. This means education is becoming accessible to those who may not work well in a traditional classroom environment, or those who are unable to attend a classroom due to financial restrictions.
Everyone on the planet can benefit from increased education. Given the high demand, it is likely that the education sector will receive a large boost in investment over the coming months and years. Those who invest in education, understand that the end goal is to educate the masses; this can be very rewarding both socially and financially.
Healthcare
Over the past few years we’ve seen an increase in different sectors utilising technology to make their processes easier, safer, and more efficient. The healthcare sector has slowly gotten on board, but if it decides to utilise technology further, we could see a huge rise in this sector. An example of how the healthcare sector could benefit from technology is the use of the Blockchain to hold medical records. The Blockchain is a decentralised ledger which is extremely secure, so it is perfect for holding private information.
The healthcare sector is also making huge progress with every year. Breakthroughs in medicine mean that doctors and scientists are able to offer a higher level of care than ever before. With this in mind, it is likely that we will see an increase in investment in this sector over the next twelve months.
Technology
We’ve already discussed the ways in which technology can have an impact on different sectors, but the technology sector itself is also one which has been lucrative for investors. Technology was the top market performer in 2017, and with technological advancements making life easier for everyone, there’s no wonder the sector continuous to perform well.
Technology provides the building blocks for innovation in every sector: it is impossible for improvement and change to happen without technology advancing.
One example of how technology may change the future is the internet of things (IoT). Already, many everyday objects are now linked to the internet, in order to make life easier for us. This incorporates everything from a vacuum cleaner that is programmed to move on its own, to a refrigerator that automatically orders groceries. As the call to make life easier grows louder, this trend is only set to snowball.
The impact technology has on everyone makes it an obvious sector to invest in.
AI
If you haven’t heard of AI, chances are you’ve been living under a rock for the last year! Artificial Intelligence has received a huge amount of media attention recently, mainly grabbing the headlines with robots who look and act just like real humans.
AI is more than just hi-tech robots – its applications range from medical diagnosis, to transportation of goods, and everything in between.
Just as Technology is a massive sector of massive growth, the astronomical attention AI has been receiving means that all eyes are focussed on it – which could be promising for investors.
The sector is still establishing itself, but once businesses within the sector have launched, it’s likely we will see a lot of investment going into AI.
Small Tip: Small Businesses
‘Small Businesses’ isn’t a sector in the way that healthcare or technology is, but small businesses are still great to invest in due to their ability to reach higher growth. It is much easier for a company worth £100k to triple their growth than it is for a company worth £100m to do the same. While small businesses do carry greater risk – they’re most likely to go bust – the reward is also higher. If you’re thinking of investing, make sure you research the benefits of investing into small businesses/start-ups as well as larger corporations. Look at the usual key things – team, track record, disruption, and scalability.