Author: Amit Raizada

Amit Raizada is a forward-thinking entrepreneur and investor whose mastery of investment and growth strategies has helped launch and grow countless successful business ventures across the globe. In 2002, Raizada founded Spectrum Business Ventures which today consists of more than 80 operating companies spanning multiple industries including technology, entertainment, real estate, financial services, hospitality, retail, eSports, fashion and others. Raizada is a lifelong philanthropist with a devout passion for giving back to the community, and in 2017 cofounded Vision Global Foundation, which supports charitable causes around the globe that focus on children and families in need and also runs the Amit Raizada Foundation. For more information about Amit Raizada please visit his bio page.

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Entrepreneur Investing

Biomedical Research Is Our Ticket to Normalcy

Laboratory glassware with test tubes and beakers, symbolizing opportunities in biomedical research investments and scientific innovation.

Biomedical Research Is Our Ticket to Normalcy

Amit Raizada

September 26, 2020

Last month, Russia made international headlines after claiming that researchers in Moscow had found the Holy Grail of our present moment—a successful COVID-19 vaccination. The announcement sent shockwaves around the world. At a moment when millions remain out of work, international travel has come to a grinding halt, social unrest has proliferated and daily lives continue inexorably interrupted, a COVID-19 vaccination could be our golden ticket back to normalcy.

Health authorities from around the world, though, were quick to cast doubt on Russia’s purported breakthrough. Dr. Anthony Fauci, America’s top infectious disease expert, said that he “highly doubts” the Russians had truly developed a cure—a refrain repeated in media across the globe. It later came to light that Russian researches had foregone critical phase 3 clinical trials, a crucial set of large-scale human trials regarded as the final—and most onerous—stage before a drug is approved.

While now more than a month in retrospect Russia’s vaccine looks far more like a publicity stunt than a medical breakthrough, the false sense of hope it elicited placed the FDA’s clinical trial procedure into the limelight.

I’ve written before about the hurdles investors and researchers must overcome to get new drugs approved in the United States. As the CEO of Spectrum Business Ventures, I know all too well the frustrations that accompany biomedical investments. In my time at SBV, we’ve backed a firm that pioneered a groundbreaking new cancer treatment that weaponizes the body’s immune system against tumors, eating them away from the inside. We’ve also helped back Dalent Medical, whose trailblazing SinuSleeve has changed the way medical professionals approach ear, nose, and throat treatment.

When approaching a venture within the biomedical sphere, investors should consider the lengthy FDA approval process that could significantly delay returns.

To get a drug off the ground, firms must conduct pre-clinical research. After having procured the necessary data, properly functioning treatments are sent through three rounds of clinical trials. During Phase I clinical trials, the drug is administered to healthy patients. If successful, it will advance to Phase II trials, in which the drug is tested on a small group of individuals who have the condition it was designed to treat. Phase III trials vastly expand the size of this treatment group, garnering critical information needed before taking the drug to market.

This is an arduous process that often disincentivizes investment in biomedical technology and novel treatments. But despite these difficulties, the FDA approval process is a critical mechanism that ensures the products being sent to market are able to effectively carry out their intended function without inflicting any significant side effects.

I urge aspiring investors to continue to look for innovative biomedical research ventures, despite some of the hurdles associated with investing in pharmaceuticals. Investors should look for opportunities that both deliver returns to their firms and partners and life-changing innovations to those desperate for new treatments and procedures.

Venture capitalists are uniquely positioned to push the medical industry to new heights. Plenty of innovative firms are developing the kinds of drugs and firms many of use once regarded as science fiction—they just need entrepreneurial investors to help get them off the ground. While the Russians’ faux COVID vaccine may be little more than a publicity stunt, the hope it elicited has shown just how desperate our world is for a vaccine.

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Entrepreneur Investing

Lessons from the Rideshare Giants

Person using a rideshare app on a smartphone, representing innovative transportation startups transforming urban mobility.

Lessons from the Rideshare Giants

Amit Raizada

September 23, 2020

The state of California and rideshare giants Lyft and Uber engaged in a remarkable display of political brinksmanship last month. As the state moved reclassify rideshare operators from independent contractors to employees, the two firms threatened to shut down their operations in the nation’s most populous state. Just as the firms were about to sever their services, the courts intervened, allowing Lyft and Uber to resume operations as usual while litigation took place.

Politics aside, this saga offers an incisive case study into the ways that firms like these—which were founded initially as startups—impact our daily lives.

As an entrepreneur, venture capitalist, and CEO of Spectrum Business Ventures, I always find it fascinating how innovative startups like Lyft and Uber have developed innovative, novel products that are now societal staples.

Thinking back just a decade ago, the rideshare concept was alien and unthinkable. The idea of catching a ride in a private citizen’s vehicle for a quick trip to the grocery store or a night out at a local restaurant was, for many Americans, frightening at first.

But both firms were able to overcome this initial concern by addressing an acute need in many communities—access to safe, clean, reliable transportation.

Americans needed new ways to get around, and Taxis simply weren’t cutting it. Often expensive and inaccessible, Americans needed access to quicker transportation at a lower price point. As they began to look for options, Uber and Lyft offered solutions.

In many ways, both firms embodied the entrepreneurial mindset that I think is integral to Spectrum Business Venture’s unique approach to investing.

At Spectrum Business Ventures, we have always sought to closely observe emerging market trends and the preferences of young consumers. While ventures of these sorts may not be immediately profitable, we are always willing to accept a loss in the short-term to secure a foothold in the most prolific firms, industries, and products of the long term. Investors in Uber and Lyft did just this—and it’s one of the reasons for which I admire them.  

I believe the success of rideshare firms can be boiled down to a few factors. The first was a present need—Americans needed transportation and were hungry for innovations in this age-old sector. Second, was innovation from millenials. Uber and Lyft were able to harness the latest technology to marry transportation with the increasingly prevalent smartphone. By using their iPhones to hail rides, consumers now had a new way to secure taxi-type services for the first time since the advent of the automobile. Third, were innovative venture capitalists, whose foresight identified a problem and developed a solution.  

Ridesharing, of course, quickly caught on with younger populations who were more tech-savvy and who were already accustomed to using their phones and the internet to streamline everyday processes. Shrewd investors closely followed emerging market trends, understood the increasing prevalence of personal technology, and realized that the rideshare model—while maybe unorthodox in the moment—could be the way of the future. It was this combination that ushered in a new wave of creative destruction, giving us, the consumers, access to a great new product.

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Entrepreneur Investing

Investing in Health Care: A Once in a Lifetime Opportunity

Close-up of laboratory test tubes, symbolizing innovative biotech investment strategies and advancements in medical research

Investing in Health Care: A Once in a Lifetime Opportunity

Amit Raizada

August 21, 2020

The COVID-19 pandemic has prompted a healthcare revolution that could usher in the next wave of biomedical innovation and redefined healthcare investment opportunities. This shift has created a unique opportunity for investors to align capital with transformative medical advancements, ensuring a healthier and more resilient future.

As the CEO of Spectrum Business Ventures —a private equity firm that has been at the forefront of revolutionary trends in biotech, payment processing, real estate, and many other industries—I’ve always sought to use capital as a tool to improve people’s lives.  

With more than 150,000 Americans dead at the hands of this virus, healthcare and medical technology are now the sectors in which this philosophy can be most effectively applied. 

I urge venture capitalists to seek out innovative and entrepreneurial ventures in two healthcare subfields: preventative health and biotech. Now, more than ever, we need large scale private investment in medical technology to help build a healthcare apparatus capable of withstanding future shocks like the novel coronavirus.

Preventive Health

At one moment, we are witnessing both the most significant stress test our healthcare infrastructure has ever endured, and an unprecedented leap forward in technological innovations. The intersection of these two defining moments will inevitably lead to exponential growth in the healthcare sector.

As we embrace this new reality—a reality in which we understand the true impact a novel virus can have on our world—we are also hyper-aware of the need to establish resources that keep us healthy.

That’s where preventative health comes into play.

Telehealth companies are an interesting new vertical within this field that fit well within the COVID and post-COVID reality. One telehealth company, Livongo (who is now in talks to merge with industry titan Teladoc), is leading the way with a revolutionary platform that helps people with chronic conditions reduce their risk for future diseases with alerts and lifestyle tips based on user data. It also helps organize health reports for doctors, streamline the purchasing of supplies, and connect patients with live coaches.

Companies like Livongo make prudent investments in the post-COVID paradigm, deliver key services to those hungry for innovation, and help mitigate public health concerns before reaching crisis-level proportions.

Biotech

COVID-19 has shown us all just how disruptive a public health emergency can be to our lives and institutions. We must place an emphasis on staying healthy now if we wish to hedge against an unpredictable future. At the same time, biotech companies like Gilead, Moderna, Abbvie, and many others are in a race for what has the potential to be the most profitable vaccine ever created. While the winner of this race has not yet been determined, other companies are undeniably looking toward the next virus, investing in R&D for new drugs that we don’t even know we need yet.

Any time there is an opportunity to invest in, and in turn, catalyze life-changing innovations, I jump at the chance. That’s why I have sought out biotech companies making innovative strides. The COVID-19 virus has awakened a newfound, widespread interest in what these incredible companies do. When a new industry becomes inundated with demand, we can expect an unprecedented influx of capital into that sector. As we saw with tech at the onset of our century, healthcare could very well be the industry that defines the next decade. Don’t miss the chance—this could be the only one in our lifetimes.

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Investing

Investing in the Personal Fitness Industry

Fitness gear including dumbbells, shoes, and accessories representing fitness tech startup ideas for home workout solutions

Investing in the Personal Fitness Industry

Amit Raizada

August 19, 2020

Over the years, I’ve come to view the gym as something of a sanctuary. After a long day at the office, it always feels liberating to lift some weights, take a spin class, or go for a run.

 

But like many fitness enthusiasts, my daily workout routine changed drastically in mid-March, when gyms and workout facilities across much of the country were ordered to close amid COVID-19 stay-at-home orders. For the most part, gyms—which make up a $30 billion annual industry in the US—have remained shuttered, and individuals have been forced to devise new ways to get their daily workouts.

 

With thousands of gyms around the country closed for the indefinite future, there exists a significant opportunity to disrupt the personal fitness industry. As an investor, I’ve always been an advocate for creative destruction—the process of discovering innovative, new ventures that revolutionize and inexorably change well-established markets. As consumers increasingly turn to personal exercise equipment and supplements as substitutes for traditional gym experiences, aspiring investors should consider how they can enter this burgeoning new market.

 

From fitness tech to nutrition products, these case studies will help aspiring venture capitalists think critically about where to seek innovative opportunities in this new vertical.  

 

Fitness Tech

 

I’ve always maintained that effective investors should look for ways to revolutionize and existing markets—and that’s exactly the effect that the proliferation of tech has had on the fitness industry over the last decade.

 

Take Peloton, for example. Stationary bikes are nothing new—they have been a gym staple for decades. But Peloton has devised a way to marry this time-honored piece of equipment with the latest technology. Pairing their stationary bikes with Wi-Fi and LED monitors, Peloton offers hundreds of live-streamed fitness classes in which users can interface with trainers and compete with other athletes from around the world—all without having to leave their homes.

 

This model propelled the company to a nearly $1 billion revenue haul in 2019.

 

Peloton—literally speaking—did not have to reinvent the wheel to achieve such success, it merely had to reformulate an extant product for a changing market. I advise investors to look for firms that integrate up-to-date tech into fitness products that can easily and efficiently be deployed from home.

 

Refueling

 

Proper nutrition is essential to staying fit, and as Americans increasingly turn to exercise as a method to cure quarantine boredom, demand for high-quality nutrition products will almost certainly increase.

 

Aspiring venture capitalists should consider ways to tailor this demand to better meet the preferences of young people, an especially health-conscious cohort that generally avoids products high in sugar, carbs, and fat. Ventures that makes inroads with Millennials and Gen Z—the consumers of the future—could well be the firms that will define the direction of the economy in ten or twenty years.

 

With this in mind, I invested in TuMe Water a couple of years ago. TuMe offers a range of hydration products that inject turmeric into water, offering consumers an easy, appealing way to incorporate the herb into their daily diets.

 

Venture capitalists should look for similar opportunities that leverage the ever-growing demand for post-workout refueling products and nascent consumption trends to develop a winning product.

 

Space

 

With the protracted closure of gyms, many Americans have taken matters into their own hands, purchasing weights, bench presses, and even Pelotons for their own personal gyms. But many taking this approach have run into a similar problem—space.

 

Those who live in high-density, urban areas often lack the requisite square footage in their apartments or condos to store their home gym equipment. This often becomes a limiting factor.

 

Aspiring investors should seek out about strategic ventures aimed at mitigating this issue. With myriad new technologies at hand and a corresponding demand now sweeping the country, innovative entrepreneurs will likely seek out high-quality models to store equipment and maximize exercise space. Will you be there to help?

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Entrepreneur Investing

Lessons Learned from a Highly Speculative Stock Market

Green tree shaped in dollar sign isolated on blue background

Lessons Learned from a Highly Speculative Stock Market

Amit Raizada

July 24, 2020

If the last few months of price movement in the stock market has shown us anything, it’s that most retail investors have no idea where the next big surge in buying and selling will be. Whether it is Tesla increasing from $361 (its March low) to $1400 (its current high) in a matter of months, or the Nasdaq hitting all-time highs in the middle of a pandemic, timing the market is one of the most difficult things an investor can try to do.

The huge swings up or down can be enticing—even intoxicating—for the new investor. Promises of fast money on exaggerated market moves have given way to a new trend of reckless investing, especially amongst younger investors.

However, one thing I believe is important to emphasize, is that this is not investing, it is trading (some may even call it gambling). While I hesitate to say that money cannot be made here in the short run, trying to time short-term market moves can easily lead to bankrupting your account. This is why I always suggest investing for the long term, diversifying your portfolio, and banking on trends that will last.

The Age of Robinhood

The popular investing app Robinhood has opened the doors to a new generation of traders through its sleek and simple platform. With these newly reduced barriers to investing, many have entered the stock market when they otherwise may not have. However, the trends I have seen emerge are troublesome and worrying.

One of the most popular features available to Robinhood investors is stock options—known more simply as options. Put very simply, options are essentially hyper-leveraged contracts that see magnified returns based on small price movement. With these, it is possible to make extremely risky trades that could see a return of 100 percent or more in a matter of minutes, days, or hours. Yet, for the inexperienced investor, this often means a quick and relentless loss.

Robinhood is all about quick and easy. It incentivizes users to cash out and leave the market just as quickly as they entered it. While a good tool for acquainting aspiring traders with the idiosyncrasies of investment, I maintain that investors should look for long-term ventures that disrupt markets, cater to the needs of young people, and will remain viable for decades.

Hertz

At the end of May, rental car company Hertz declared bankruptcy. Under normal circumstances, a company’s bankruptcy would cause the stock to plummet and never look back. However, on June 4th, the Hertz’ share price soared an inexplicable 900 percent. This incredible move indicates that the allure of penny stock investing has now made its way to the mainstream.

Many observers cited the correlation between the number of Robinhood accounts holding Hertz stock and the meteoric rise of its share price. When investors back bankrupt companies with cheap shares, euphoria and myopia prevail over diligence and foresight. It doesn’t take a Harvard MBA to see that a moribund firm just simply won’t be viable in ten or fifteen years.

Nikola

Another testament to the current investment paradigm we’re seeing is Nikola (NKLA), a carmaker marked—and cleverly named—as a competitor to Tesla. Equipped with hydrogen fuel-cell technology, many investors saw Nikola as the future of the low-emission auto industry.

But Nikola’s fall came just as abruptly as its rise. After peaking at just a shade under $100 per share, Nikola stock price currently sits at just $40 in change. For aspiring investors, Nikola is an excellent case study of the dangers of jumping onto short-run investment bandwagons.

Investment is a tricky business. While penny stocks and have been glorified in movies like The Wolf of Wall Street, a long-term investment strategy built around disruptive firms and services will yield greater returns in the long-run.

I urge aspiring investors to see investments differently. Look for innovative ventures that fill voids in consumption created by younger generations or that provide a novel service within an already established market. Look for the ventures that deliver life-changing new technologies to people desperate for innovation. Look for ways to generate returns while changing the world for the better—that’s where the real satisfaction is made.

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Entrepreneur Investing

Millennials and Markets, Part III: Investing in the Source

Millennials and Markets, Part III: Investing in the Source

Amit Raizada

July 6, 2020

In the second article in this series, we looked at how millennials prefer to search for investment opportunities that match their own lived experiences. Likely a consequence of the adverse economic conditions in which they were raised, younger generations have looked to cryptocurrencies as a solution to alleviate some of their economic fears, like inflation and bank failures.

In an economy where cradle-to-grave employment is all but gone and individuals have become accustomed to switching jobs every few years, brand loyalty has been deeply eroded among younger generations. Millennials and Gen Zers tend to support “the little guy,” over the blue-chip, name brands. Eschewing the rigidity inherent in many of these brands, they prefer to work, and invest, on their own time – supporting gig economy firms like Uber and Postmates.

In the final installment of this series, I wanted to face the cornerstone of the millennial capital paradigm – using investment to create social change – head-on. Many young investors have sought out ventures that directly address the societal inequities they hope to redress.

Directly Investing in Social Change

Millennials have long been known to directly invest in social change. Perhaps the most striking example of this was found during the movement for justice after George Floyd’s death. We witnessed the powerful impact of crowdfunding and social organization, allowing young people to leverage their money for social causes they cared about. ActBlue, the Democratic National Committee’s main fundraising wing, saw one of its largest fundraising hauls in the days after the initial protests. Young investors are becoming significant benefactors of nonprofits and advocacy groups, choosing to place their money not into corporations, but into institutions that will drive the change they wish to see in the world.

As a vocal proponent of tolerance, I am incredibly optimistic about the trends in giving that we are witnessing among the younger generations. We are seeing that they are not afraid to give directly to the social causes they care about; And, as technology continues to make the giving process even simpler, we will see millennial support for charitable causes grow exponentially.

Millennials are truly revolutionizing the investment landscape, leading with their values and eschewing all companies, commodities, and causes that don’t align with those values. As I have always said, the secret to investing is really no secret at all: Always keep your finger on the pulse of younger generations’ tendencies and the trends that emerge from them. By keeping this in mind as you make your next investment decision, the upside will be forever in your favor.

Many millennials and young people fell they were dealt a poor hand. To be honest, I can’t say I blame them. But they were also born into a period when consumer technology has taken off, when green energy has challenged the traditional oil barons, and when society has begun to value social awareness over capital gains.

Whether we choose to understand their preferences or not, they are the future of the US economy, and their propensities will dictate whether firms take off or sink for the next fifty years. These preferences, while different from my generation’s, are no mystery. With shrewd observation, venture capitalists can identify these preferences and invest in firms that advance them. The millennial investment wave is coming – it’s up to us whether we get left behind.

If you enjoyed our book series then please check out our Millennials and Markets Parts 1 and 2.

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Entrepreneur Investing

Millennials and Markets, Part II: Currencies and Gigs

Millennials and Markets, Part II: Currencies and Gigs

Amit Raizada

July 6, 2020

In the first installment of my series on young people and their changing investment habits, we looked at how their “millennial outlook” on investment had been shaped by adverse economic conditions in which many were raised and by a desire to use investment as a strategic tool to drive social change. In that article, we discussed how sustainability is a significant concern among millennial investors, as many seek to patronize innovative green firms like Tesla in lieu of the traditional fossil fuel giants.

But it’s no surprise that climate change and sustainability are important to young people. In this article, I wanted to examine some millennial preferences that are less intuitive to outside investors. In many ways, this mirrors one of my favorite investment strategies – closely observing the preferences of young consumers to gain a foothold in the markets of the future.

Cryptocurrency

Cryptocurrencies like bitcoin, Ethereum, and Litecoin are continuing to gain popularity with millennials. But I believe a deeper, psychological shift is underlying the younger generations’ move to crypto. Many young people experienced the Great Recession in their teens and the COVID-19 pandemic in their twenties, is it any wonder that they’re circumspect about banks?

As the Federal Reserve enacts protocols of “unlimited” quantitative easing – a process where America’s central bank buys assets to pump money into the economy – there is a profound concern about the state of inflation, the dollar, and fiat money in general. If the Fed has the ability to essentially create money out of thin air, what does it mean for the value of our greater economy?

By investing in blockchain technology, investors are putting their money behind a valuable innovation with advantages that look quite enticing against the backdrop of today’s economic woes. By allocating a portion of their portfolio to cryptocurrency, the next generation is essentially hedging against the failings of the global economic system. If economic policy or global unrest causes the collapse of fiat currencies, what will be there to take its place? Cryptocurrency.

It’s important to note that the situation I’m describing is closer to a doomsday scenario than reality, and I wouldn’t necessarily recommend allocating a large sum of money to cryptocurrency. However, as a proponent of diversification, I side with millennials in my belief that crypto has its place in any well-diversified portfolio.

Solo Entrepreneurship / Self-Employment Technologies

Some larger corporations view their employees as expendable, which leads employees to take flight in search of better benefits and pay (I personally think companies need to incorporate a people-first approach into their business model).

With more tools available to nascent entrepreneurs than ever, the next generation of investors is turning to companies that empower the “little guy.” Shopify—an e-commerce platform that offers extensive resources for budding businesses—has seen an incredible resurgence since the crash in March, signaling that investors expect retail stores to increase their online presence (and sales) in the years to come. As barriers to entry are lifted and overhead expenses minimized, small business finds a space to thrive, making Shopify and related services like Square (a mobile payment company) incredibly enticing investment opportunities to the young investor.

As we see millennials make the jump from corporate jobs into self-employment, the gig economy is in full swing. Technological innovation—by way of Uber, Lyft, Grubhub, Instacart, etc.—has afforded people the opportunity to dictate their own hours, pay, and freedom. Younger generations are serious about freedom, and their investments show that.

If you enjoyed our book series then please check out our Millennials and Markets Parts 1 and 3.

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Entrepreneur Investing

Four Books to Read As The Economy Continues to Fluctuate

Four Books to Read As The Economy Continues to Fluctuate

Amit Raizada

June 22, 2020

Having spent more than two decades as a venture capital executive, many of my friends in other industries often ask me if there are any books that I would recommend to aspiring investors or career professionals looking to spruce up their investment portfolios.

Reading is an excellent way to learn about finance and investment. One doesn’t need a Harvard MBA to start observing market trends and placing investments. Reading the right books can often equip an aspiring investor just as well as a course at a leading university.

As we near our fourth month of quarantine and I find myself with more down-time than ever, I decided to compile a list of the books that I find particularly appropriate for those looking to learn about investment.

Here are four selections from my bookshelf that I would recommend to anyone interested in venture capital, business, or even just economics in general.

The Intelligent Investor, by Benjamin Graham

Published in 1949 by Columbia Business School professor Benjamin Graham, The Intelligent Investor is the seminal work on value investing—the investment philosophy that emphasizes purchasing shares in companies that are undervalued by the market.

Value investing involves buying stocks in companies that, while sound in practice and in leadership, are experiencing some kind of downswing.

Patience is the key to successfully integrating value investing into your portfolio. Successful value investors look for undervalued companies with a plethora of upside, buy stock, and hold onto that stock until things begin to turn around.

Value investing is one of Warren Buffet’s key strategies, and he often credits Benjamin Graham for having developed the theory.

Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets,
 by Nassim Taleb

Finance is complex; and the best way to become a shrewd investor is to consider the myriad different academic disciplines and theories that the field encompasses. Fooled by Randomness, which concerns primarily the statistical and psychological facets of randomness, is a great example.

Taleb argues that the world is far more random than we perceive it to be. Sometimes the models and data upon which many investors depend can be impugned by little more than pure random chance.

I like to consider this when thinking about my signature investment strategy – looking toward the markets of the future. By closely watching emerging market trends and the preferences of young investors, I can help insulate my portfolio against randomness not accounted for in many forecasts.

Taleb’s work forces investors to consider the roles data science and psychology play in investment – critical for finding success in this field.

The Little Book of Common Sense Investing, by John C. Bogle

Written by John Bogle, the late founder and CEO of Vanguard, The Little Book of Common Sense urges aspiring investors to place their money into index funds.

Index funds, he says, are low risk, low cost, and track with the markets writ large. By investing in an index fund, your returns will mirror those of the index as a whole, rather than falling victim to the booms and busts of one unique stock.

Picking individual stocks can be arduous and time-consuming. Choosing an index fund means you won’t have to worry about shorting the market – just invest your money and let the S&P do all the work.

In many ways, this is an ideal strategy for a first-time investor or a recent college student.

Capitalism, Socialism, and Democracy, by Joseph Schumpeter

Another post-war investment classic, this book resonates with me for a different reason than what the title suggests. An economist and political scientist, Schumpeter devotes portions to explaining the differences between capitalism and socialism, but I prefer the second half, where he introduces his famed theory of creative destruction.

Creative destruction, he argues, is all about what we today call, “disruption.” Schumpeter holds that technological innovation stemming from entrepreneurs disrupts markets and destroys traditional monopolies, giving way to new firms that take over and reshape the field.

Some of today’s major tech firms, like Google, Amazon, and Netflix, began as startups with an innovative new idea that transformed the tech industry, forcing out the established firms like AOL or Blockbuster, and giving life to new verticals like streaming and on-demand online shopping.

This fits perfectly with my investment strategy of seeking cutting-edge ventures that offer footholds in the future of the economy. Investors should keep Schumpeter’s wisdom in mind when looking for opportunities. Which firms will be the one to dethrone some of today’s industry leaders?

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Investing

Millennials and Markets, Part I: Introduction and Sustainability

Millennials and Markets, Part I: Introduction and Sustainability

Amit Raizada

June 9, 2020

2020 has been unlike anything our country has seen in a generation. Between a global pandemic and unprecedented economic uncertainty, this year has been a dismaying and disillusioning time for our younger generations, who are now tasked with building a life and achieving financial stability amidst great insecurity.

Despite these difficulties, young people are still choosing to invest their money – and their faith – in the market. But some of the ways they’ve chosen to do so, undoubtedly informed by their experiences, have been markedly different from those exhibited by generations past. For younger investors, it’s no longer just about the monetary return. Young people today see investment as a tool to induce societal change. 

Gordon Gekko’s famous "greed is good" doctrine is out, replaced by an investment mantra that privileges social impact over raw returns.

In this series of three articles, I look at ways young people, who came up amid the economic uncertainty of two major recessions and a global war on terror, choose to invest their money, and what these changes mean for the venture capital industry.

For the last few years, we’ve seen report after report about millennials’ reluctance to jump into the market, with many young Americans opting to hide their extra cash in the sofa and savings accounts. Yet, others have been holding out for the right moment, citing an overvalued market and an eagerness to "buy low." Well, for those who have been holding out, their time came this March as the stock market crashed nearly 30 percent due to the worsening reality of the coronavirus pandemic. As fearless millennials began to flood the market with investments, we were finally able to get some insight into their investing habits—what they value, and just as interestingly, what they don’t.

As CEO of Spectrum Business Ventures, I saw that, as the market bottomed out, there was an opportunity to place new strategic ventures at a time when others saw fiscal collapse. And, to my surprise, many millennials did too. But unlike generations past, millennials don’t choose their investments based purely on ROI; the invest in the firms and ventures that will help shape the world in accordance with their social and political preferences. In this first article, we look at one of the primary ways that millennials have “put their money where their mouth is” and made social statements with their wallets during this volatile period: sustainability.

Sustainability

Young people value sustainability to such a degree that green living has become an indelible component of the millennial experience.

As I’ve noted before, following emerging trends is one of the most important things an investor can do when searching for the next big company. It’s no surprise that some of the biggest winners over the last year have been millennial favorites like Tesla and Beyond Meat. Their financial success is a prime indicator that market sentiment is swaying toward sustainable, eco-friendly products and services. And millennials are leading that surge: SoFi Invest (a millennial-specific financial firm) noted that Tesla has been the most purchased stock on its platform for significant periods at a time.

On the flip side, we also witnessed the price of crude oil take a severe dive as falling demand and oversupply hit the once-dominant energy commodity (remember when crude was trading at -$37 a barrel?). In my opinion, this didn’t just come about because a slowdown in global activity—this was a culmination of investors’ fears of changing spending habits among the next generation. Millennials are rightly asking themselves why it’s necessary to fund ecologically harmful fuels when sustainable alternatives are viable and increasingly available. This is exactly why sustainable funds have outperformed their less sustainable peers during the pandemic.

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Investing

It’s time to diversify your investments

Golden egg standing out among white eggs, symbolizing unique investment opportunities and the importance of portfolio diversification.

It’s time to diversify your investments

Amit Raizada

May 20, 2020

The novel coronavirus has given way to some unusual business and economic headlines over the last two months. A rollercoaster couple of months for the stock market. Speculation of an impending housing or rent crisis. The possibility that Jeff Bezos may become the first trillionaire due to Amazon’s surge in revenue.

 

Yet, perhaps nothing was more unexpected than last month’s precipitous drop in oil prices. In late April, overproduction and decreased demand caused the per barrel price of crude oil (for contracts to be delivered in May) to slip below $0. Investors on both the macro and micro-scale, from the governments of Saudi Arabia and Russia to small local capitalists, were left reeling as their petroleum assets lost literally all their value overnight.

 

While prices somewhat recovered in May, this episode illustrated a crucial concept in investment that all prospective venture capitalists should consider: diversification.  

 

Diversifying your portfolio and investing in a plurality of industries can be an effective insurance policy against wholesale financial ruin when the economy begins to contract. When your money is spread across a multitude of sectors, rather than concentrated in one narrow market, odds are that at least some of your assets will stay above water when a recession hits. The more diverse your portfolio, the greater the odds your assets will continue to perform.

 

A shrewd investor should never, as the old saying goes, place all your eggs in one basket. I spend a lot of time considering many scenarios, but I had not factored in a global pandemic. Diversification helps protect against both the known and unknown.

 

Here are some of my strategies to help you diversify your portfolio.

 

1. Follow emerging trends, they’ll lead you in new directions

 

Diversifying your portfolio can often be a difficult task. While every investor wants a diversified set of assets, finding new industries in which to place your resources is often challenging.

 

An innovative way to go about this, though, is to follow emerging market trends. In my case, I often look toward the consumer products and experiences in which my kids demonstrate an interest. I use their preferences to help craft long-term investment strategies that pursue the products and experiences that will dominate the market in the coming decades.

 

This approach leads me in directions I would’ve never expected. A decade ago, I never imagined that I would have been invested in online video gaming or in fast-casual restaurants like Tocaya Organica. But by following nascent investment trends – and the things kids like to do or eat – I was led to two lucrative ventures that helped further spread out my portfolio.

 

You can follow suit simply by closely watching consumer trends – particularly those of future generations.

 

2. Take risks in pursuit of bold ideas

 

Investors can always diversify their portfolios by taking some calculated risks.

 

This could mean investing in a startup with an innovative new product that may not be profitable in the short-run. It could mean looking for investment opportunities overseas or in products that may face regulatory hurdles.

 

At my firm Spectrum Business Ventures, we strive to see the world differently. We look for investments in ventures that others overlook, we look for opportunity where others see none. And to do so we take risks – calculated risks.

 

When it comes to diversity, these risks often take us into uncharted territory. They’ve propelled us into rocket and satellite technology firms, biomedical R&D companies, novel restaurant and entertainment models, innovative consumer shopping technologies and improbable real estate acquisitions. Above all, though, our pursuit of cutting-edge innovation has broadened SBV’s portfolio.

 

Aspiring investors should do the same. Take smart risks in pursuit of bold new products or industries. You’ll end up with a well-rounded, diverse portfolio that has invested your money across a spectrum of industries, ensuring that you’ll have some cushion the next time we hit an economic bump in the road.