SPACs and ICT Investment Opportunities in 2021

A side effect of the fiscal intervention made by Western governments supporting economies during Covid has been the rise and rise of SPAC’s. For the 99.9% of the population who sensibly are more interested in gardening or the fulminations and machinations of Europe’s top football clubs, SPAC’s, Special Purpose Acquisition Companies, appearance may have been unnoticed. They represent a new way of taking firms public, bypassing what some see as the cumbersome traditional IPO (Initial Public Offering) process. 

A SPAC consists of a promise to give a management team considerable financial resources with their aim being to gather sufficient assets together to construct a going concern and float it on the market. According to the Economist Magazine (1) some $100bn has been raised between January and April 2021 for the purpose of finding interesting nascent private companies to bring to market. The bringing of Virgin Galactic to market via a SPAC was an early example of this trend in 2019.

A $100bn of new business is a lot of new business! Or to put it another way before Covid and prior to governmental interventions absence of cash may have been cited as limit for the progressing of a good business – but in a world with SPAC’s, awash with easy money, we have seemingly limitless funds to support good business idea’s.  So in our world of ICT where should we spend some of this money?

The ICT industry is seen as an interesting market space for SPAC investment. As a senior investment executive said: “the ‘new normal’ in working see’s gains for the ICT industry. Waiting in the lobby for a Zoom call to start will replace waiting on the platform for the 9:05am to Paddington to arrive.” The arrival of SPAC’s is concurrent with a change in our work patterns – and both are a result of Covid. 

Pulling together the strands from a number of customer conversations we see market opportunity in the following dimensions of the ICT industry:

Bandwidth everywhere but not where we want it. The internet traffic has moved from the office to the home, from the city centre to the suburb (and village). With working couples both at home Zoom resource contention would be a matter of idle dinner party conversation, if there were dinner parties. A number of suburban bandwidth plays have been made in the past, 4G modems, mesh, discrete fibre solutions and perhaps now 5G modems may be viable, subject to the specific’s of cities town’s and regions. What’s clear said a board member is “The new normal of work will be much more work from home and we have a duty to help our staff be effective in this new way of working“. In summary there’s an expectation that all novel bandwidth solutions will be given extra impetus in 2021 and have better cases for investment. 

Digital assistants galore. With staff working remotely a renewed interest in Digital Assistant’s and Office Productivity aids may be expected. Some companies have already implemented tools to track white collar work performance at home, although in early implementation these can often be blunt and damage morale. “HR can tell I’m in front of my computer, but they can’t tell which game I’m playing!” as a recent graduate remarked. Tools for aiding efficiency will become more sophisticated and measures of remote working fairer and more discriminating all leading to opportunity in the ICT space.

Security at the edge.  Away from the office our personal security setting can mistakenly be reset to ‘at home’ rather than warning ‘working at a remote site’. The security issues of a largely working from home workforce will require a new processes and tools for all companies, from the simple (increasing the security training and given more emphasis to the risks of remote work) to the complex specific tools to facilitate secure remote working. 

Ed Tech and the drop in office. “Where I used to be in the office 4 days a week I suspect after June I’ll be in less than 2 day’s a week” said one board member. …“On the one hand I want to find ICT tools so I can run meetings so all parties can contribute equally, a mash up between Slack, digital and physical whiteboards, Webex and Teams”“and for the younger staff who most miss those water cooler moments a nice WeWork environment (at the right price!)”. Solutions are being actively sort in ICT for the challenges we now face in the work

If any of these remarks have sparked thoughts as to how ICT investment will evolve through 2021 please contact us. We’d be delighted to chat! 

Azenby is a consultancy comprising of seasoned ICT veterans with experience across business case development, project definition and management, and new business venture including due diligence reviews for investment and acquisition

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