The Value of Investing in Disruptive Technology – The concept of a seismically radical idea reshaping an industry isn’t new; disruptive innovations have been a thorn in incumbents’ sides for decades.
However, in recent years, disruptive technologies have increasingly made waves across a spectrum of industries: finance, real estate, healthcare, professional services, agriculture and many more. As technology advances at a breakneck pace, it makes sense that disruptive technologies are following apace.
All of this is good news, especially if you’re an investor. Investing in disruptive technology is a formidable opportunity to see sizeable returns on a big idea. This article details the value of investing in disruptive technology.
The Ground Floor of Skyrocketing Growth Opportunities
The main benefit of investing in disruptive technology – the value cited by virtually every venture capitalist and early IPO investor – is that you are getting in on the ground floor of something potentially earth-shattering. The reward end of the investor’s risk/reward analysis is potentially massive with disruptive tech.
Of course, there’s an important caveat: you cannot be indiscriminate with how you invest in disruptive tech. You need to train your critical and evaluative eye to look for technologies that meet a demand, solve longstanding issues and generally “have legs” with consumers.
Favorable Conditions for the Widespread Embrace of Disruptive Technology
The point above addresses why you should invest in disruptive technology, but perhaps a better question is: Why now?
According to investment experts, disruptive technologies are enjoying a sizeable uptick in popularity, thanks to shifting consumer demographics, changing industry attitudes, and the pandemic.
Following COVID, “a lot of businesses and consumers have turned to these disruptive technologies as solutions,” says Ren Leggi, client portfolio manager at Ark Invest. “These are cheaper, faster, more efficient. And the companies associated with these technologies, that are the enablers and beneficiaries, are gaining significant market share from those incumbents.”
Demographic changes may also play a role. Millennials have emerged as a commanding presence in consumer markets. They are the largest buyers of real estate in the country and, according to Morgan Stanley, the largest driver of net new loans. They also have a highly favourable view of disruptive technology.
According to Regan McGee, industry attitudes are finally changing. He told GlobeNewsWire, “We are seeing a huge increase in the use of our platform as we are witnessing industry-wide acceptance of new technologies.” His company, Nobul, is currently disrupting the real estate industry, offering a streamlined, consumer-centric approach to finding real estate agents.
Many Tech Companies Are Undervalued, Fairly Valued, Rebounding
“Isn’t it risky?” an investor might ask. The short answer is: maybe. While there are inherent, inbuilt risks in any kind of investment, experts at Morningstar contend that many disruptive technology stocks are undervalued or fairly valued. They may require patience, says the financial services company, as disruptive technologies often take years to reach full potential – but they can see meteoric growth in that time.
Meanwhile, Nasdaq, the world’s second-largest stock exchange, recently published an article titled “Disruptive Technology Investing in Rebounding,” in which they celebrated disruptive technology funds “raking in double digit returns.”
Disruptive innovations have a lot going for them. They are high-reward, timely investments that make a wise addition to any portfolio, whether you are a casual investor or a high-level VC.
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