Post COVID-19, some of the tech sector is likely to become a buyer’s market. Distressed companies and venture capitalist portfolios that haven’t been able to access necessary funding will be looking to sell at reduced valuations. That won’t be the case for all; some companies have recently done debt deals that have improved the robustness of their balance sheets. Similarly, certain companies, particularly in the software and internet space, are eyeing possible IPOs in the second half of the year, pending a return of stability to both the tech sector and other key areas such as equity, credit and oil markets, even with the traditional uncertainty that accompanies the US election cycle.
It’s likely that future investor interest in tech will fall into three general types. First, in the companies that have survived the crisis either by pivoting their market offering to sustain their balance sheet, or by using debt or equity to prove their long-term viability to investors.
Second, in ‘Big Tech’ companies that have benefited from the crisis in terms of increased consumer use or sales. These companies are likely to emerge stronger and more valuable, helping to sustain substantial investor interest.
Third, and much like 2008, there will likely be more intense investor interest in the kinds of nascent tech that have found their market during the COVID-19 crisis, such as the next generation of streaming and video communication, remote security and tele-medicine.