In which innovative areas are business angels investing in 2017?

03/10/2017

Inside investment process, the search for opportunities is closely related to the rates of profitability estimated in each business, industry or new technology. In the age of the digital economy, investors have learned that innovative startups return greater benefits over other traditional investment models. In this sense, new chambers are launched every year around which sectors or business areas will attract more private investment. This article reviews the innovative businesses to invest in 2017.

Before answering this question, it is important to look back and collect private investment data during 2016. If we look at the conclusions of the Business Angels Report of the Spanish Association of Business Angels (AEBAN), private investment in 2016 focused in the following sectors of activity:

- 51% of the angels opted for the software/ICT industry

- 28% invested in trade and distribution

- 25% opted for the health sector and medical equipment

- 21% relied on digital media and content

- 19% invested in professional services

- Finally, up to 13% of the investors surveyed in this study put the focus on the biotechnology sector

If we compare the results with the f="http://www.aeban.es/sites/aeban.es/files/Informe%20Business%20Angels%20AEBAN%202016.pdf" target="_blank">report referring to investments in 2015, it follows that in 2016 private capital increased significantly in the sector of health technologies and innovations, from 16% to 25%. In turn, the advanced manufacturing and materials sector rose from 0.8% to 7% in just one year.

Innovative businesses to invest in 2017

Once exposed the results of 2016, it is time to point out the prospects of this year. In this sense, Ad&Law, a firm specialized in advicing Spanish startups, underlines that in 2017 private sector investment in technology will grow by 30%; in addition, the consultant company emphasizes the following fields or sectors:

- Foodtech industry

It encompasses all kinds of technological advances related to food and precision agriculture or agri-food sector. Already in 2015 the sector broke records, reaching 5000 million investment worldwide; and the outlook for the coming years follows the same growth trend.

- Legaltech sector

All the technologies applied to professional offices have attracted the attention of investors. Aspects such as cloud storage systems, new management software tools or advanced legal writing programs, are to blame for this. If you are interested in going deeper into this sector, we recommend you this reading: El País Retina report on the legaltech sector in Spain.

- Fintech sector

Technological innovations related to the financial sector are completely changing the way people interact with banks, manage their savings and investments, or spend their money. In fact, according to a report of the international consulting firm Accenture, investment in fintech companies worldwide grew by 75%, while it did so by 57% in Spain, following the estimates of Startupxplore, the largest investor and startup community from Spain.

- Artificial intelligence (AI)

Applications based on artificial intelligence are being today another focus of major investor interest. These innovations apply to various fields such as autonomous driving, agriculture or manufacturing and supply chain. If you want more data about investment in this area, we recommend you this reading: Digital Startup Ecosystem Overview 2016, a radiography of the digital startups ecosystem in Spain promoted by Mobile Word Capital Barcelona.

Innovation has become a key element in the business and investment universe. In an increasingly globalized and competitive world, only those businesses with disruptive and innovative ideas can more safely achieve maturity and success. Among all these projects, one criterion largely determines the different investment agents: the rates of profitability of their investments.

Which sectors will be the most profitable to invest in the future?

Private investment agents are always on the hunt for new investment ideas. Although the field of investment in startups is very dynamic, there are some trends. The economic newspaper Expansión points out the attractiveness of the following sectors from the point of view of profitability:

1. Digital education
2. Smart buildings ans sustainable housing
3. Nanotechnology and its application in the field of medicine.
4. Mobile telephony
5. Turism
6. 3D impresion and its new applications in many sectors
7. Electric cars

What to invest today? Sustainability, connectivity or health will capture much of the investments as more profitable sectors of this 2017 and future. The commitment to scientific projects and innovative new companies is on the rise. After some difficult years, economic indicators show a progressive recovery of the Spanish economy; being private investment one of the parameters that grows the most. In fact, during the past 2016, this investment model grew in Spain by 58%, according to data provided at the last National Congress of Business Angels.

Nowadays, more and more capital invests in innovative projects. On the one hand, startups offer opportunities for short-term profitability; and on the other hand, they contribute to the regeneration of the Spanish business fabric, making it even more competitive outside its borders.

In this context, science parks are an interesting source of investment opportunities, as Big Ban Angels points out in its 'Keys to Investing in Startups' guide. Connected to universities and research groups, the parks host companies that are committed to all types of science and technology-based projects. In addition, these spaces act as communication vehicles between entrepreneurs and investors, through the organization of forums, workshops or collaboration agreements with networks of business angels or nearby investors.

The Science Park of the Universitat de València houses all types of companies and startups related to fields of great interest to the different investment agents. If the technological offer of its different innovation clusters is observed, it is clear that most of its companies are aligned with the trends highlighted in this article.

Are you an investor and would like to know the technological offer of the companies of the SPUV? Access the full potential of this ecosystem of innovation through this link.

References

 Diario Expansión. (2017, 04, 08). Los sectores que serán más rentables para invertir en el futuro [Piece of news]. Recovered from http://www.expansion.com/ahorro/2017/04/08/58e357c3e5fdeaee348b4571.html

Roure J. y San José, a, (2017). INFORME BUSINESS ANGELS AEBAN 2017. Recovered from http://www.aeban.es/sites/aeban.es/files/Informe%20AEBAN%202017.PDF

elEconomista.es. (2017,02,17) Los sectores tecnológicos más atractivos para los inversores este año. [Piece of news]. Recovered from http://www.eleconomista.es/emprendedores-innova/noticias/8161423/02/17/Los-sectores-tecnologicos-mas-atractivos-para-los-inversores-este-ano.html

Huerte, J. (2016, 02, 20). Sectores tecnológicos para invertir en 2017. [Piece of news]. Recovered from http://www.innovaspain.com/sectores-tecnologicos-invertir-2017-fintech-ad-law/

Bisbal, P. (2015) Guía Claves para invertir en startups. Recovered from http://www.bigbanangels.org/uploads/ebook-claves-invertir-startups.pdf