Predicting 2021—Mario Casabona Takes a look at the 2021 Angel Investment Landscape
By Mario Casabona, founder of TechLaunch
Trying to predict 2021 based on past data may be difficult because 2020 has seen an unprecedented economic situation. So, instead of relying on 2015-to-2019 data, I’m going to make some predictions based solely on my 2020 experiences as an angel investor, mentor and entrepreneur. I’ll leave it to the analysts to look back in order to predict the future.
1. New Jersey Entrepreneurial Ecosystem: The best and most successful entrepreneurs have historically always sprung from desperate and trying times, either because of their natural instinct for survival or their need to invent a solution to solve an immediate problem. As an example of both, consider Boxcar (Chatham), which in 2019 was basically an integrated commuting company. During the pandemic, their business dried up. Instead of shutting down, however, they pivoted to — among other things — providing grocery drive-thru pickup services for their customers, thus maintaining at least a skeleton crew and providing a solution to an obvious need. I predict that in 2021 we’ll see an uptick in entrepreneurial activity, which will manifest itself in new and exciting tech startups. Primarily, it will be for the purpose of providing solutions to real-world problems, which, after all, is the fundamental mission of entrepreneurship.
2. Capital for Startups: I believe that 2019 was a record year for investors and startups, but the end of the first quarter of 2020 saw the start of a trend toward retrenchment and uncertainty, when most angel investors seemed to shore up their existing investments. I certainly did. However, by mid-year we became more comfortable with the new normal. We relied on our technology against a backdrop of little to no face-to-face meetings. We had to trust our instincts and back them up with more data and information. I predict that we are going to pick up where 2019 left off, especially with the use of technology, the promise of state and local incentives and, most of all, the cash that is waiting on the sidelines.
3. Valuations for Seed-Stage Tech Ventures: Valuations may vary considerably, depending on the geographical location. For instance, on the West Coast, I have seen higher valuations and more fluid investments. In the Midwest, I have seen more reasonable valuations and more product focus, while on the East Coast, I have seen higher valuations on yet more onerous terms. In 2020, I believe the valuations declined due to pandemic uncertainties, but in 2021 they will regain their 2019 levels, and even increase slightly.
4. Star Industries: While fintech, mobility tech, pharma tech, biotech, medtech, internet of things (IoT), telecom, etc. have had considerable growth over the past several years, I believe that digital health and alternative energy will provide interesting opportunities in 2021. The pandemic has shown us that telemedicine and technology-enabled healthcare can certainly be provided in urban, rural and suburban areas without having to rely on office visits. Furthermore, payments for these virtual visits are now recognized and approved by insurance companies and Medicare, which will make them more accessible to Americans everywhere. Additionally, I predict a rise in alternative energy startups in 2021, not just for photovoltaic (PV) applications, but also for new energy sources (especially renewable) and controls.
5. The New Normal: One of the driving factors that will solidify our entrepreneurial ecosystem over the next few years will be how we deal with and understand the current and future pandemics. Besides discovering and reformulating vaccines and developing new therapies, we will also need to modify our behavior and adapt to new norms. Two obvious examples are the more widespread practice of virtual meetings and remote work. At first, I personally resisted virtual meetings, but now I spend most of the day “Zooming.” It’s actually a very efficient technology for business meetings, and for connecting with family and friends. Working from home reduces overhead and energy costs for the business, while allowing some personal flexibility to the employees. The pandemic has shown us that we can run a significant portion of our businesses remotely and virtually. But we must also proceed with caution, taking into account the cost to our interpersonal skills, emotional health and personal relationships. I believe that 2021 will be a transformative year that will define the new normal of how we do business and how we live our lives, just as 9/11 remolded our sense of security and redefined our approach to an open society for years to come.
Mario Casabona is an entrepreneur and angel investor. In 2011, he founded TechLaunch, committed to identifying and nurturing early stage tech ventures by mentoring, coaching, and providing access to resources and capital. To date, TechLaunch has supported over 100 tech companies and mentored over 200 budding entrepreneurs. In 2006, he founded Casabona Ventures, investing in over 30 seed and early stage companies.
Mario is Chairman Emeritus of Jumpstart NJ Angel Network and Chairman Emeritus of the R&D Council of New Jersey. In 1982, he founded Electro-Radiation Inc., which was acquired by Honeywell International in 2004. He received the SBA National Tibbett’s Award for his contributions in technology, and was listed as one of the top five most influential persons in New Jersey technology by The Star-Ledger. He was twice recognized by New Jersey’s TechUnited, first as the recipient of their Legend of Technology Award and subsequently their Financier of the Year Award. He currently serves on the Boards of various for-profit and non-for-profit organizations. Mario is an electrical engineer and holds eleven national and international patents in the field of satellite-based navigation and communications.