The world as we know it changed beyond all recognition when the UK went into lockdown on 23rd March. For the first time, in many of our lifetimes – we were forced to stay at home, limit contact with our nearest and dearest and find new ways to live and work. The impact on our economy has been truly seismic and the outlook for British business is challenging.
Technology as a force for good
We know the current environment can be a daunting prospect when considering new investment opportunities. However, a number of sectors have capitalised from the crisis, in particular those that have harnessed technology to meet the changing needs of consumers. New habits were formed during those long weeks of lockdown that look likely to remain and we believe those companies that are at the forefront of technological innovation are likely to benefit in a post COVID world.
In particular technology, media, consumer products and pharmaceutical companies are potential beneficiaries of the crisis over the long term – developing superior products, making smart acquisitions and investing in innovation. McKinsey recently summed up this shift through highlighting that the “economic shock set off by the pandemic has accelerated and intensified trends that were already underway.”
E-commerce leading the charge
The COVID 19 crisis has also accelerated the pace of digital change, new models of e-commerce have emerged, and this is only likely to increase over time. For example, while traditional retail models suffered during lockdown, online spending accelerated during this period. The surge in online shopping caused by the pandemic is expected to add £5.3bn to UK ecommerce sales this year, to total £78.9bn according to analysts at Edge Retail Insight.
In our own portfolio, we invest in those companies we believe have the potential to grow rapidly and that have developed a ground-breaking product that has the potential to disrupt an existing industry. For some of our companies, we have seen their industries change and adapt much quicker than we could ever have imagined in recent months.
Spotlight on Artfinder
One such company that has benefited from the change in consumer habits, is Artfinder. For the average person, the art world may seem intimidating, even impenetrable to all but the most knowledgeable of experts. But with the increase and accessibility of online galleries this is slowly changing. Artfinder has been at the heart of this movement and has a very simple model – to connect people with artists and art. The site has been growing fast and currently connects 450,000 subscribers around the world with over 6000 artists and galleries internationally, offering over 500,000 pieces of art.
While traditionally, many people purchase art through physically visiting galleries and art shows, this completely stopped when the world went into lockdown. And therefore, those people that wouldn’t generally shop for art online, suddenly found themselves wanting to spend more time and money adorning their homes. This has had a really positive impact on the company, in Q2 it recorded its best sales quarter in its seven-year history. Compared to 2019, it experienced an 120% increase in sales growth and 15% increase in average order value and it has recently raised over £830,000 in its first crowd funding campaign. The digital global art market generally has experienced huge growth, with Sotherby’s reporting an 131% increase in the number of lots it has sold online so far this year.
So, as we slowly emerge from the restrictions of lockdown, there are a huge number of opportunities developing from the rapidly changing environment. We will continue looking for those early stage, start-up companies that are embracing this change and capitalising on the evolving landscape.
David Mott, Founder Partner