Before our world was flipped upside earlier this year, I had already begun to see big shifts happening with consumer habits.
I’m sure you saw it too.
The emphasis was on convenience.
You can blame Amazon for this… and also thank them for paving the way.
Today the demand for “contactless convenience” is taking previously niche-luxury companies, and turning them into an absolute necessity.
I will share two companies with you today –– one better known, one lesser-known –– both of which are cashing in on this cultural shift we’re living through.
See what companies I’m talking about and how you can apply what’s happened with them to future startup investments.
I know, hearing about COVID-19 is getting old. However, if you aren’t crystal clear on its long-term effects, you’ll miss the opportunities in the new economy.
Reading the big headlines isn’t enough. As an angel investor, it’s your job to interpret trends and project them out into the future.
The big takeaway here is that some parts of the COVID-bubble will pop — but others are undeniably here to stay.
New Funding For Delivery Super-Unicorn Instacart
Instacart will deliver groceries to your door in under an hour. Place your order on your phone, sit back, and wait. They will even get items from multiple supermarkets in one go.
Instacart is back in the news after earning another $200 million in funding, bringing its valuation up to $17.7 billion. This comes just four months after the startup had a $225 million round.
Instacart’s investors include Y Combinator, Sequoia Capital, and D1 Capital, to name a few.
Is this a pandemic-age Cinderella story?
Nope. Instacart had already raised over $1,895,800,000 in funding before COVID-19.
Sure, COVID turned this convenient service into an essential one. But it was already working with a cultural shift. Those titans of capital that placed their bets on Instacart and looking for a short-term win, they are betting on the future.
Room For Competition, goPuff Takes the Stage
goPuff is another delivery unicorn, delivering groceries, over-the-counter medicine, alcohol, and loads of other necessities. They deliver almost anything you could get at the supermarket or pharmacy in under 30 minutes, 24-hours a day.
Like Instacart, goPuff is in the news after another big ol’ funding round. Accel, D1 Capital, Luxor Capital, and Softbank led the round, offering $380 million to the delivery company.
Before COVID-19, goPuff had already attracted tons of investors to the tune of over $866 million in funding. Since then, that number has risen to $1.35 billion, giving goPuff a valuation of $3.9 billion.
goPuff has been clear that their mountain of cash will be put to use for long-term growth. The team has brought on experienced new leadership and is already planning their future battles with Amazon’s and Uber’s delivery services.
This thing isn’t going away.
What Else Has Changed and Won’t Go Back?
Grocery delivery is just one part of the new economy that has serious staying power.
We all know about Zoom’s insane year thanks to remote-working necessities, but do you know what happens when things go back to “normal” again?
According to Global Workplace Analytics:
“Our best estimate is that we will see 25-30% of the workforce working at home on a multiple-days-a-week basis by the end of 2021.”
They go on to explain this shift, citing the money-saving benefits of remote work for businesses, the impact of remote work on sustainability, and increased demand by employees.
The future at-home workforce will continue using gig sites like Upwork, conferencing tools like Zoom, collaboration platforms like Slack, and everything in between. Any startup offering something new that facilitates remote working is poised for success, now and in the future.
E-Commerce and Direct-to-Consumer Sales
Department stores and legacy brick-and-mortars are in decline. Don’t go investing in any mom-and-pop stores right now. But, if you find a smart retailer with a direct-to-consumer model, that might be worth a shot.
According to the U.S. Census Bureau e-commerce grew 44.5% between Q2 2019 to Q2 2020.
By the end of 2020, department stores are expected to have fallen a whopping 60%.
Here’s the big news — a new e-commerce report by IBM says that the pandemic, “pushed the industry ahead by around five years.”
They go on to say, “The shift away from physical stores was already underway, but we’ve now jumped ahead in time as to where we would be if a health crisis had not occurred.”
In short — there is no turning back, only looking forward.
Delivery services, video conferencing, electric vehicles, video games, streaming services — these are just a few of the many winners of this era that are in it for the long-haul.
Looking a few years out, the startups that will continue to grow post-COVID-19 are the ones that were already a part of a culture shift before things went sideways.
What’s more, the products and services that became essential during quarantine and social-distancing life are now deeply entrenched in us. Habits are hard to kick.
Let me make this clear — we just might be living through the biggest investment opportunity of your lifetime. As an angel investor, you need to understand what things will look like when the dust settles so you can place your bets accordingly.