Alex Read, VGC Partners
The pandemic is inspiring and driving greater innovation amongst entrepreneurial businesses, says Alex Read, Director of New Investments at private equity firm VGC Partners.
The pandemic and ensuing lockdowns have inspired many entrepreneurial SMEs to introduce new ideas and innovation into their business, says Alex Read.
He says: “We have seen a huge amount of innovation emerging from both new brands and existing brands. For many businesses it has been a real catalyst for positive change and improvement. It has got them to think critically about what their core proposition is and how they can really improve, pivot and mature as a business on the back of it.”
He adds: “I think difficult periods are always catalysts for this type of change and evolution, so although it had been a very challenging period for many businesses, it has also been a really interesting period. We have seen a wave of innovation across the board and that has been really positive.”
Alex says that a key area for innovation for SMEs has been around trying to join up their online and physical presence so that they are able to provide a seamless offering to customers across multiple channels.
He says: “Many businesses are really focusing on introducing innovative technology that allows them to bridge the gap between their online and offline channels more effectively and create a more frictionless and convenient way to engage with their consumers going forward. Companies that are able to do that, particularly in the consumer and the consumer tech space, have seen a real rise in interest and funding.”
Alex points out that innovation is not just confined to online activity; businesses that still need to sell through physical stores are also innovating as they seek exciting new ways to entice customers into their stores.
He says: “Physical retail for consumers is evolving significantly because businesses recognise that as people will be buying more online than they used to, it will be more of an occasion for them to go into a physical store. So they need to really drive brand awareness and consumer engagement.”
Some of that innovation is being focused around the idea of turning physical stores into experience spaces for customers, such as creating pop up art galleries to show off selected products. Some businesses are also seeking to harness innovation by leveraging emerging technologies such as Virtual Reality and Augmented Reality.
Alex says: “The pandemic has really created a necessity for businesses to think critically about how they will innovate in order to capture that consumer market going forward.”
Alex says that all this innovation has attracted the attention of venture capital and private equity investors, particularly those focused on the consumer technology market. “There is a huge amount of interest from investors in businesses that are innovating and adopting new technology because this is such a fundamental part of the business model going forward. We have seen heightened interest from investors in identifying businesses that have looked to leverage this technology and innovate along these lines.”
Alex’s top tips for businesses
1. Focus on your core proposition and make sure it is clearly and effectively communicated.
2. Focus on the short-term objectives of the business as well as the long term objectives because the market is evolving quite quickly.
3. Ensure that you have the right team in place to provide the skills and support to allow growth.