How the investment landscape has changed in 2020

8 Dec 2020

Elaine Coughlan. Image: Atlantic Bridge

Atlantic Bridge’s Elaine Coughlan spoke at Future Human about how Covid-19 has affected certain tech sectors when it comes to investment opportunities.

Covid-19 has brought uncertainty to virtually every sector and industry, and the world of funding and investment is far from excluded from that.

In fact, the latest State of European Tech report from Atomico showed that the three biggest challenges facing founders in 2020 were securing access to capital, pivoting their product offering and a decline in new sales.

In spite of this, the report also showed reasons for start-ups and investors alike to be positive about the future of European tech, with total investment for 2020 on track to exceed a record $41bn.

Elaine Coughlan, managing partner and co-founder of Dublin-based tech fund Atlantic Bridge, was of a similarly optimistic opinion when speaking to Ann O’Dea at the inaugural Future Human conference in October.

She said that despite the many challenges, technology has been “one of the bright spots” this year with the pandemic causing the adoption of technology in many areas to accelerate.

“Anything related to cloud and infrastructure as a broad sector is very, very strong. E-commerce, mobile apps, anything that enables contactless economy – so whether that’s contactless payments, whether that’s contactless purchasing and engagement, and employee and customer engagement and communication – that’s all doing very well.”

She added that healthcare in general has unsurprisingly been a very strong sector. But in the longer term, trends around tech adoption within healthcare are also strong.

“I think some of the fundamental underlying technology like quantum and AI, robotics and process automation, they are all being accelerated and you’re seeing that now and the types of companies that are raising money,” she said.

Raising the bar for investment

While there are plenty of industry and sector-specific companies that have continued to thrive throughout the pandemic and investments are continuing to happen, Coughlan noted that the way in which investment is taking place has changed.

“The bar has really been lifted high, or it was always high to attract institutional capital, but it’s even higher now. So round sizes are way bigger … and that’s because investors want certainty [and] longer runways for companies.”

Along with bigger funding rounds, Coughlan said investors are also looking for strong management teams, most likely with experience. “If you add all that up, what it means is for the early-stage companies that are starting out that may have fantastic technology but are our first timers and/or may be unproven or have not yet reached product viability, it’s a hugely challenging environment,” she said.

This is something that has been reflected in recent reports from the Irish Venture Capital Association and TechIreland. However, Coughlan advised early-stage start-ups to continue “pushing forward” in spite of the challenging environment. “I think engagement is key. Realistic business plans are key and realistic assessments around valuation as well,” she said.

“The good news is this industry can continue. We can continue to get transactions done.”

Jenny Darmody is the deputy editor of Silicon Republic

editorial@siliconrepublic.com