What Will 2021 Look Like? Insight from the Experts
What can we expect to see this year regarding the ability to raise capital? Will the COVID-19 crisis continue to impact investor behavior? Which industries will become stronger? And where can we anticipate seeing significant change?
"2020 was certainly a dramatic ride! And with the insanity of that year now behind us, it’s time to look ahead and ask: What can we expect to see in 2021? At Profitian, we asked some of Israel’s leading financial and legal professionals.
Here are a few of their insights:
As soon as the world started to adjust to living within the limitations of COVID-19, we began to see investors going back to the table and investing. They went back to investing significant sums – and for companies with high valuations.
In addition, the fluctuations of the stock market prompted a new wave of both initial and secondary stock issuance and debt issuance. In some cases, we saw the development of a new “bubble” – i.e., where companies were traded at multiples as compared to their level of activity, companies were sold with very high valuations, etc.
The announcements about the COVID-19 vaccine offer renewed hope for the international economy – a sense that a return to some form of normalcy is on the horizon.
At the beginning of the crisis, companies announced they had discovered the future
of work – the “office” of a new era. They spoke about working from home partially or fully, and it seemed we no longer needed expensive offices to encourage productivity.
However, as time passed, many understood that part of our identity, our DNA, is connected to collaborating and working side by side in a shared environment. Unofficial meetings at the coffee machine or in the hallway, informal discussions not connected to work –
these are what encourage the creativity so crucial in tech and strengthen the connection to the organization’s goals.
These things are harder to convey in a virtual environment. In the post-COVID world, it is reasonable that companies will allow a degree of flexibility regarding working from home. But in my opinion, working at the office will continue to hold significant weight.
Regarding what we can expect in 2021, my understanding is that there’s cautious optimism that the traditional economy will recover – and this will positively impact the tech sector.
Capital raising throughout the COVID-19 period did not decrease. And to the best of my understanding, we are not expecting it to decrease in the foreseeable future. As always, the good companies succeed in raising capital even during the COVID-19 period, even without having physical meetings with investors".
* Dror bychkov - shoshay. assurance hi-tech partner, E&Y israel.
"One needs to be cautious, yet I’d say that I anticipate – at least in the first half of the year – seeing a strengthening of trends that we’ve already been seeing in the past year: large IPOs in the United States and in Israel, and mega deals by global giants that already are familiar with the Israeli market and are active here.
Together with this continued investment in mature companies, I believe we’re also going to see continued recovery with regard to raising capital for younger companies (see
Regarding specific industries, I believe we’ll see the continuation of trends that existed in previous years. We can expect the computer software and services industry to lead (including cyber, of course), the Internet, and life sciences.
Regarding the ability to raise capital from investors this year: Angel investors and venture capital funds have been and will continue to be central players in the development of the tech industry.
From this perspective, I believe we can expect 2021 to be extremely positive. Regarding the stock market, at least in the first half of 2021 we can expect a wave of IPOs of Israeli unicorns in the US, in addition to continued IPOs in Israel.
At the same time, you can’t ignore several “question marks” such as the impact of a serious third wave in Western countries, a shortage of vaccines, a new American administration, and political and economic instability in Israel that could even hurt Israel’s credit rating. These are possibilities that could have negative repercussions".
* Tamir hay. Hi-tech partner. bwC israel
"I’d like to adopt an optimistic viewpoint, based on what I’ve been hearing in the news recently. I anticipate that, somewhere near the second half of 2021, the business world will go back to more routine behavior patterns. Israeli tech companies will once again view overseas activities as their life blood, as a crucial aspect of their development.
The last quarter of 2020 showed that the technology sector is starting to recognize the Israeli stock market and the Tel Aviv Stock Exchange (TASE) as legitimate
channels for raising capital – even for growing companies whose revenue is just at the beginning stages (and even for companies that have not yet started to sell). Because of the strong push of many different parties in this direction, it seems to me that this trend will continue very strongly in the coming year.
As to the evolving “UAE era,” The big question here is whether the honeymoon period that started in September between the Israeli market and investors in the UAE will yield fruit at the rate and with the breadth that we are all expec
ting: On the one hand, this does give the impression of being an Israeli obsession with a passing fad, i.e., a temporary investment trend. But on the other hand, many Israeli technological solutions are highly appropriate for implementation in the climate of the Gulf. It is therefore possible that we will see an outpouring of UAE investment in Israeli technology companies".
* Achai gomeh, adv. partner, Hamburge Evron & co. law office.
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