What Will Angel Investing Look Like in 2035?

Pittsburgh has a long history of founders who started and scaled businesses. Think of Willard Rockwell, Henry Clay Frick, Fred Rogers, Andrew Carnegie, George Ferris, Charles Schwab, Richard Mellon, Jonas Salk, Henry Heinz, and Edgar Kaufman to name a few. In today’s world, they would be called “ entrepreneurs,” and even though the word has been used for centuries, I do not know if this word was used when they started their businesses.

Why did these historical figures start their business? Was it to feed their families? Were they fired from a job, and decided they wanted to be their own boss? Were they so smart they could foresee the future? Why did Fred Rogers create his Neighborhood? Why did Henry Heinz sell pickles? Was it strictly a business decision, or was it more personal? 

From our perspective, in today’s world, would Angel Investors have invested in Fred Roger's PBS program. Would they have invested in Heinz's pickle business, Were they “ solving a problem&rdquo, as so many Angel Investors ask constantly? Or did they simply see an opportunity to fill a business need?

Think of your life at age 25. Is your age 35 life what you expected at age 25? Is your spouse who you thought it would be? Are you working in the same industry? Did you ditch engineering to become a politician? (I hope not! Unless your name is Valerie) Did you think your spouse, and children would be who they are? (of course, your children look, act, and think like your spouse, so they are perfect)

When you start a business, you are predicting the future. You are predicting there is a need for your product, your goods, or your service. 

As Angel Investors, one of our jobs is predicting the future, and predicting what goods and services people will need in five, ten, or fifteen years. Will companies like Twitter still be important, or will issues such as Palliative Care, climate control, crop damage, and basic needs be more important.

We think today’s problems are enormous, but problems existed in the 1800’s and 1900’s, and many were worse than today’s problems. But how did people, and specifically, these historical figures identify a problem?

In the 1800s, radio and TV did not exist, newspapers were few and far between, and social media did not exist, except for your Aunt Helen (see sidebar). In the 1900s, these now traditional forms of media existed, but the information did not freely flow as it does today with the internet. 

So how can we identify the businesses that will thrive and survive in the next 15 years? And remember the quote by Joan Robinson earlier in this newsletter about normal times.

This article will start a discussion about startups and early-stage companies, and how Angel Investing will affect their future. This and future articles will address two key questions:

      1.    Who will be tomorrow’s Angel Investors?

      2.    What type of businesses will be thriving?

Tomorrow’s Angel Investors

It will not just be the old white guy, which has been the predominant Angel Investor. We are seeing more women in the Angel Investing space, and this will continue. Demographic trends show that the majority of college students are female (over 60%), and this will translate into all forms of business. In addition, even though it has been proven that females are fewer risk-takers than men, more women are starting businesses, which should lead to acquisitions, exits, and opportunities for these females to invest in future Angel deals. 

And with more female Angel Investors, the types of investing will change. There will be a focus on goods, products, and services that men may not be interested in investing in. 

What about Hispanics, Black people, and the gay community? Each of these demographics is growing and becoming more influential. As they start, grow, and scale a business, this will also lead to acquisitions and exits, which will produce a new type of Angel Investor. What influence will they have on the types of businesses that receive Angel Investments?

Future articles will focus on this trend.

Types of Businesses

The NY Times DealBook recently had an article about business trends, stating that “Demographics are destiny”, suggesting that much of the future is preordained by population trend lines.

For example, do you want to know how much lithium we are going to need to make batteries over the next 20 years? Demographics may supply the answer based on the size of the population, and the number of cars per household. Using this type of information may (and I emphasize may) make it easier to identify future business opportunities. Some questions and factors we need to ponder that will affect new business over the next ten to fifteen years (this list will grow in future articles):

• Technological advances. Forget Twitter or Snapchat. True technological advances could greatly affect our lives, and businesses. For example, if someone invents Star Trek’s transporter beam, what will happen to cars, buses, airplanes, gas stations, automotive repair shops, and even the glass industry?
• Artificial Intelligence. For example, self-driving cars have been in discovery mode for several years, but when will they be deployed. If there is a breakthrough with cars’ artificial intelligence, how will this affect the rental car industry? If people no longer own cars, do we need as many parking garages, and will they become the next shopping malls.
• Lifespans and the Aging Population. Ignoring Covid, people are living longer, but not necessarily healthier. Palliative Care will become the new buzzword. The need for nursing homes, caregivers, hospice care, and other elderly issues will have a major impact on the future. Not just for those affected, but for the children and grandchildren of those afflicted.
• Infrastructure. Whether you are a Democrat, Republican, Independent, or someone who is smart and does not identify with any political party, infrastructure will remain a major issue. And with more technology and other advances, how do we identify what is needed in fifteen years. And if someone does invent the transporter beam, do our roads need to be repaired? And more importantly, if there are no longer cars, will anyone remember the phrase “A deer caught in the car’s headlights”?

So what comes next? What will the world look like in 2030, or 2035? We will continue to explore these questions in our first January issue.