William Bao Bean, who holds over 20 years of experience in investing and is currently the general partner of SOSV, has said that COVID-19 will be the driving factor behind both a recession and a tremendous change in customers’ habits.
As the pandemic strikes the economy, there has been a general discussion of a potential recession hitting nations.
In Southeast Asia, Singapore was the first country confirmed to be in a recession last quarter, according to a Bloomberg report. Meanwhile, Indonesia’s finance minister Sri Mulyani Indrawati has predicted a four to five per cent decrease in the country’s GDP in the third quarter, leading it to a potential recession.
“There are two things to take note of. First, that people need to understand we’re heading into an economic downturn. The second thing is that this type of shock is quite special because it’s driving an equally massive change in habits,” Bean says in an interview with e27.
“Stay at home is driving the adoption of digital [platforms] extremely quickly. So on the one side, it’s an economic apocalypse, but on the other side, people are focussed on the change of habits,” he continues.
While balancing these two directions can be tough, there is plenty of good news on the ground.
Good businesses are still trading at a premium price. The fact that many investors continue to fund startups such as Ula, Tiin Tiin, and TurtleTree indicating that some companies are not cracking under uncertainty.
“You want to position on companies that are prepared to, or at least, going to be in a position to do well during this very uncertain time,” Bean stresses.
He gives the example of VR technology which was on no one’s radar before COVID-19. Now, suddenly VR headsets are selling out because people are bored and can’t go outside.
Bean’s 2020 industry predictions
Winners of the future will be very different from the winners of the past which, according to Bean, will mostly be driven by newly formed habits.
E-sports is expected to be “fricking huge,” he says.
“With an audience larger than the NBA, tennis and American football, it’s over half a billion people who watch these sports. Plus, you know, some people [prefer to] watching it, instead of playing it. Right now, a lot of sports are not airing and who is the beneficiary of [having] no sports on TV?” the investor points out.
Gaming has become one of the most common past times of entertainment and experts predict that the trend is here to stay.
Twitch, a leading live streaming platform for gamers, noted a viewership increase of 56 per cent this quarter compared to Q1 2020 while growing 60 per cent year over year. Facebook Gaming also saw a boost from the lockdown growing 75 per cent throughout Q1 until now.
Aside from gaming, Bean also expects online education and online media to have a longevity period of growth.
This is mostly driven by the needs of parents and students who were forced to study from home during the circuit breaker measures implemented in Singapore, and similar approaches taken in other countries.
As with the case of e-sports, online media are also experiencing a surge in popularity as customers see their offline entertainment sources becoming limited.
Investing in the previously unreached
As predicted by many, the health tech sector is also experiencing growing popularity amidst the global health crisis, particularly for products or services that enable users to interact more safely and ease the burden of the healthcare system. One example of such platforms is telemedicine or telehealth, which enables distance consultation between doctors and patients.
According to this CNBC report, in the US, social distancing measures at doctor’s offices and hospitals could push telehealth interactions to one billion by the end of 2020. The case in Southeast Asia can be quite similar as telemedicine platforms claim rapid growth during the crisis.
Naturally, Bean’s biotech accelerator also expects to see growth in the health tech sector. Started in 2014, the US$3.2 billion-worth accelerator sees a “heavy focus” from investors on COVID-19-related health investments.
“We’re focused on investing, not only in the people who already have access to technology but also in the billions of users in emerging markets who are moving from offline to online,” Bean explains how they aim to do it.
For them, this is the major trend that they want to focus on, particularly in markets such as South Asia, Southeast Asia, Middle East, Eastern Europe, South America, Latin America, and Africa.
This article was first published on e27, on Jul. 27, 2020.