5 Investment Opportunities Accelerated By The COVID-19 Pandemic

Human history is one of continuous innovation and increasing productivity. Sometimes there are bumps and sluggish periods of growth along the way, but our unique ability to make and improve our own tools generally keeps progress marching forward. 

And whenever there is a crisis—be it war, pandemic, or financial free-fall—the demand for innovation and increased productivity intensifies. We need more from our tools (and more new tools) during those periods, so the process of innovation tends to accelerate. 

We’re in one of those periods right now. COVID-19 has forced humanity to hit the accelerator on a number of trends that were already growing steadily. 

Here are five of the important trends COVID has expedited, along with some of the opportunities each presents to invest and build for the future.

 

1. Medical technology

The global population is aging rapidly.

The U.S. Census Bureau estimates that by 2034, the number of people aged 65 and older in the U.S. will outnumber those aged 18 and under. Now, consider that roughly half of the average person’s lifetime spending on health care will come during their senior years, and you can see why demand for better treatment and medical technology was already increasing before COVID. Simply put, when people live longer, they spend more on health care in order to maintain a reasonable quality of life. 

COVID has accelerated existing trends toward telehealth, remote patient monitoring, and precision medicine. A pandemic that overwhelmingly affects older populations has created high demand for effective virtual diagnosis and treatment of other illnesses and injuries. I’m personally invested in a remote patient-monitoring company that saw a sevenfold increase in its revenue in the first half of 2020 compared to the last six months of 2019. And, in addition to telemedicine, the biotech, genomics and medical device sectors are all experiencing a surge of investment as the population ages.

 

2. The digital revolution

The digital revolution began decades ago with personal computers and, since then, it’s had an immense impact on our society. The difference now is that its growth is getting faster and heading deeper into sectors people never imagined it would touch. 

Pandemic lockdowns and quarantines accelerated the digital revolution because everyone had to figure out how to continue working and functioning in daily life while isolated. The meteoric rise of Zoom to a household name is a great example, but that really only scratches the surface of what’s possible. For instance, you can now have that same Zoom call quickly transcribed by an artificial intelligence assistant, such as Otter. One of my funds, SV Tech Ventures, invested in the AI-based transcription company, which has seen demand for its services soar during the pandemic. 

As the effects of the digital revolution compound, the number of concepts moving from science fiction to mainstream will continue to grow. That makes it an excellent time to invest in the underpinnings of the digital revolution, like internet infrastructure and security, AI, and SaaS.

 

3. Robotics and automation

The digital revolution going on in software, AI and cloud computing are just one side of a high-tech coin. On the other side lies robotics and automation, industries currently flourishing as their products become capable of performing a dizzying array of tasks. Robots that climb stairs, deliver pizzas and deftly handle complex physical challenges are finally here.

The necessary physical isolation of humans during the pandemic has led to a boom in that sector, as well. When people can’t go to work, organizations begin to consider whether a robot can do the job a human used to. Remember that robotic dog from Boston Dynamics that went viral last year? It’s being used to measure patients’ vitals to reduce human-to-human contact during the pandemic.

As the demand for robotics increases, there are good investment opportunities in the sector, as well as in the smart hardware and sensors that will enable robots to handle more physical challenges on their own.

 

4. A changing geopolitical landscape

Anti-globalization didn’t begin with COVID. Trade disputes, labor issues and friction between countries were facts of life long before the pandemic circled the globe. 

But COVID supercharged this trend. Borders closed, the blame game began and, perhaps most importantly, supply chains started to fray and break. Countries were scrutinizing their supply chains for personal protective equipment and ventilators. Where did they come from? Why was the manufacturing of critical resources outsourced to different countries? The result was an even more insular approach to global affairs combined with a renewed focus on enhancing domestic productivity and technologies. 

Technically advanced countries will continue to invest in areas like automation to enhance productivity and manufacturing capabilities, while less-developed countries will try to speed up the development of cutting-edge technologies.

 

5. A new economic cycle

Last year, returns in the stock market were great, and there was plenty of high-fiving and celebrating all around. 

Typically, that type of “party time” mentality prefaces an end to the good times of an economic cycle. A pandemic-induced recession may not be the “normal” way an economic cycle ends, but it’s obviously had a massive effect on the world economy—whether you want to call it the end of the current cycle or the beginning of a new one. 

A possible silver lining for investors: The junction of economic cycles is a great time to have equity in future-tech companies. These types of companies will see increasing demand for their products in the coming years—whether in the private or public market—as the economy rights itself and begins to climb again. Additionally, events like a pandemic can actually accelerate the market growth of this type of company, and the valuation of assets, such as private companies, tends to be more in favor of investors now. 

The first four trends I mentioned have accelerated the need for future technologies, which helps these types of investments penetrate the market cycle fairly well. There will always be downturns, but when the demand is there—and growing—investments in future tech are affected less, and sometimes even benefit, during those downturns. 


Pingrong “PR” Yu is a Silicon Valley-based venture capitalist who invests in early-stage deep-tech startups in a variety of industries. He has invested in more than 80 companies and served on the boards of more than a dozen of them. Prior to his investment careerYuPR also has extensive experience in R&D, with more than 30 highly cited peer-reviewed papers and patents to his name.

Yu’s education transformed his life, and he has devoted much of his nonprofit work to helping others receive the same transformative benefits from their education. He has chaired a zero-energy-consumption building competition for thousands of college students from 13 countries, and is a longtime mentor for Schwartzman College, helping guide a new generation of leaders from many different cultures and backgrounds. He also serves on the advisory board of research and innovation at the University of Colorado at Boulder.

He obtained his Ph.D. from the University of Colorado at Boulder and his B.S. from Peking University.