Key VC trends

Wealth of Knowledge

Gimv has been operating at a European level for many years. A key benefit of this is that we have a very good overview of what is happening in many local markets. This broad vision enables Gimv to select companies that stand out as potential winners.

Although trends appear to pop up spontaneously, in practice there is always a small set of variables that drive a trend. Picking winners means understanding how and by whom these variables are formed, where the current growth drivers are. The point is not to predict too far into the future – which is too difficult anyway – but to focus on Gimv’s typical 5-year investment horizon. For the next 2 years, Gimv has identified at least four key trends that inform our investment strategy: ageing, convenience, low cost, and green.

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Ageing

An important trend in our society is the ageing population in developed countries. Low birth rates and longer life expectancy have huge impacts: a shrinking active population, a substantial increase in healthcare costs, prevention campaigns, etc. But also consumer behaviour changes as each new generation becomes used to innovations and a better standard of living, which they wish to maintain.

The challenges are especially significant on the healthcare front, as are the opportunities for companies providing medical equipment, patient monitoring technologies and devices, etc.

Older people have different needs and desires, creating new marketing opportunities. A whole spectrum of services is out there, evidenced by an increasing number of magazines and trade fairs offering specific financial products, cars, housing solutions, clothing, travel packages, etc. What used to be niche markets are becoming expansive new markets.

Maybe the most important aspect of success for any company, although not age-specific, but which will become more important in an ageing society, is “ease of use” of products and services.

Sadly, an ageing society also means more elderly people living alone, having become widowed or because of increasing divorce rates. No impact, you think? It does in fact impact the car industry (more small cars), housing & planning (singles often live in an apartment), certain technical aspects related to food and especially food packaging (single portions), etc.

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Convenience

In our daily lives convenience, simplicity and speed are very important.

Companies like Apple and Philips have thrived on the simplicity concept for years. But many recent big hitters also exemplify simplicity: think of Twitter, Google, Skype, etc. Good concepts have a simple, easy to grasp, value proposition. Consumers ‘get it’ immediately, and so do investors.

Other SaaS companies and our software portfolio companies such as Nomadesk, Luma, Openbravo, etc. have simplicity concepts integrated throughout the entire organisation, in terms of product development, business & revenue model, customer interface, etc.

Convenience and speed were the initial success factors of specific market segments such as fast food (McDonalds), but they have now revolutionised the whole retail industry.

Consumers are looking for convenience services offline as well as online. In the end it all comes down to simplicity. If it is too complex, too cumbersome, if the waiting queues are too long, the consumer clicks out of a website or goes to the shop next door … With a vertical search engine as provided by our portfolio company Easyvoyage you have all available travel deals at your fingertips without the hassle of trawling the web for the best ones.

In the business world, people want to have full access to all information anywhere, anyhow... Remote desktop control is a prime example, and Gimv’s recent investment in RES Software reflects this trend.

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Free/low cost

There is no such thing as a free lunch …

In past decades, some of the world’s brightest businesses were based on Cheap but Cool products and services. Think of Ikea, low cost airlines, Zara … all examples of massive low cost deployment of high-end alternatives that became more successful than these alternatives.

We devote a lot of time to identifying businesses that apply these same rules in electronics and on the Internet. On the Internet in particular we have seen mass-market adoption of private sales, price comparison engines and cutting out the middleman.

In software we continue to push our portfolio companies to use similar mass-market principles: the new buyer of software is the user and not the IT department. This means that ease of use, free trials and mass adoption are required to create new winners in this sector.

At least as relevant is the use of mass market, low cost marketing tools such as Twitter, Facebook, private betas, and so on.

This is true not only in terms of the buyer, but also development needs to be much more efficient. The use of open source components, offshore development centres and open platforms need to be core in the development strategy of future investments.

At the end of the day, we are looking at our own business model as well: doing more with less.

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Green

If there is one investment theme that can’t be ignored, then it is “Green”.

When the VC world refers to Cleantech, in our view this is not just one new investment idea but a theme that cuts across many sectors: from energy generation and energy efficiency, over numerous industrial processes to energy consumption of consumer appliances, mobility and many others. The common link is the objective of using the world’s resources more effectively, more efficiently and in a sustainable way.

The drivers and motivations behind this objective, however, couldn’t be more diverse: they include concerns about climate change, the upcoming scarcity of certain natural resources and attempts to guarantee a secure supply of energy, fuels, water and other materials.

Plus, there is a strong trend towards urbanisation, ever growing megacities and increasing consumer awareness about how unsustainable some aspects of our economies have become. These drivers overlap in many areas but also lead to some conflicting initiatives - ‘a really inconvenient truth’!

For us, it is important to reflect on the definition of Cleantech, and for each investment we need to really understand which driver we are investing in and how the company will bring us closer to sustainability. It is about investing in companies that make economies cleaner. Investments should focus on increasing the yield of solar plants, storing energy in a more cost and energy efficient way and avoiding the path of fossil-fuel based logistics …

There is also huge potential for energy efficiency companies. Companies that help people and other companies to adopt a more rational approach to energy and natural resources are among the future winners. This includes consultancy, recycling, energy savings, water treatment facilities, etc.

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