Investing in tomorrow

Deeptech 

The Deeptech industry, encompassing technological, ecological, societal and health innovation stands at the forefront of advancement in sectors such as biotech, healthtech, and cleantech, making remarkable strides in areas such as genetic engineering, AI, defence technology, and novel drug development. Investors in this sector play a crucial role in supporting advancements that could redefine the future of healthcare, defence, environment, and quantum computing, among others. 

In 2022, European deeptech companies have raised over €14 Billion, but while the US and China are pumping huge amounts of money into their tech sectors, Europe is nevertheless “in danger of stumbling in the geotechnological race,” according to an article published in the Financial Times. 
Professor of Finance at the Ecole Polytechnique and Sciences Po Paris, Philippe Tibi, has high aspirations, after helping to persuade 23 institutional investors with backing of the French government to commit €6 Billion of late-stage funding to the tech sector.  
As announced by French President, Emmanuel Macron, on June 14th 2023, phase two of the Tibi initiative has been launched, envisioning a further €7 Billion of institutional investments in the tech sector over four years, focusing mainly on early stage, deeptech and cleantech investments. “Our aspiration is to have ten VC funds managing €1 Billion,” states Tibi.  

Meanwhile, US drug developers raised $6.2 Billion in January 2024, marking the largest total since February 2021, as biotech companies are raising money at the fastest rate since the peak of the mid-pandemic. “There has been a noticeable, dramatic improvement in sentiment among investors,” states Rahul Chaudhary, head of healthcare equity capital markets at Leerink Partners in another article by the Financial Times. 

 
Cybersecurity  

The digitisation of information, the proliferation of cloud services, and the ubiquity of IoT (Internet of Things) devices have significantly expanded the attack surface for malicious actors. From state-sponsored cyber espionage to ransomware attacks, the threats facing individuals, businesses, and governments are diverse and constantly evolving.  

Furthermore, with the advent of Web 3.0, new challenges in cybersecurity are arising, including the potential for new methods of cyberattacks such as "Sybil attacks" and "Cryptojacking." Consequently, it has become imperative to develop adequate solutions to mitigate the risks associated with these attacks, making this need increasingly urgent 

Investing in the Cybersecurity sector offers a unique opportunity to contribute to the ongoing battle against cybercrime. Companies at the forefront of this industry are dedicated to developing cutting-edge technologies such as threat detection and response solutions, artificial intelligence-powered analytics, and encryption technologies are among the key areas where innovation is driving progress. 

While it is an active contribution to the resilience of our digital society, investing in Cybersecurity is not just about protection; from a financial standpoint, it is about capitalising on a rapidly expanding market. The increasing frequency and severity of cyber threats create a growing demand for innovative solutions. As financial institutions, businesses, and individuals alike recognise the intrinsic value of secure digital operations, the Cybersecurity sector remains a strategic and lucrative investment avenue. 

The high demand for cybersecurity solutions is equally reflected in the job market, with “over 500 000 posts to be filled in France”, as Valérie Dmitrovic points out in an Interview with BFM Business in November 2021. Her digital school, Guardia, specialised in cybersecurity, is opening its third campus in France in only two years, as part of the Quest Education Group, clearly demonstrating the necessity and strong demand for cybersecurity experts and solutions.  
With two schools in Lyon and Paris respectively, the new campus is opening in Bordeaux, with admissions open for the start in September 2024. 

 
Generative AI 

Generative AI, epitomised by models like OpenAI's GPT-3, is reshaping the landscape of human-computer interaction. From content creation to complex problem-solving, Generative AI holds the promise of unprecedented innovation. The ability of Generative AI systems to develop human-like text, code, and art opens up new possibilities for automation and creativity, presenting exciting prospects for investors. 

Despite recent concerns about France’s validation of the European AI Act on the 2nd of February 2024, new regulations will not constrain accelerating development in the sector, but rather serve as a framework for fostering responsible and ethical innovation, ensuring the responsible deployment of artificial intelligence technologies to benefit society while minimising risks. 

For example, Mistral AI made headlines with a €105 million fundraising round in June 2023, and €385 Million in their second round in December of the same year. Clara Chappaz, Director of La Mission French Tech, is enthusiastic: “Something exceptional is happening in France in the field of AI. It is very exciting. This development is a good example of the State's ability to be a long-term strategist. Whether in terms of its capacity of calculating or of attracting the best international laboratories, everything has been put in place to get us to where we are today.”  Stay tuned ! 

 
Gaming 

Gaming has evolved from a niche hobby into a global entertainment phenomenon, transcending traditional boundaries. The rise of esports, mobile gaming, and virtual reality has opened up new vistas for investors. The industry's increasing integration with mainstream entertainment, coupled with lucrative in-game purchases and advertising opportunities, makes gaming a compelling investment choice. As technology continues to advance, the gaming sector is positioned for sustained growth, offering investors a ticket to the forefront of the entertainment revolution. 

In a survey of 200 of the gaming industry’s leading participants in North America, conducted by Ernst & Young in collaboration with Oxford Economics in 2021, the represented companies showed annual revenues ranging from $20 million into the billions, while the global revenue for the industry that year exceeded $193 Billion. 
And numbers are growing: in 2023 the global gaming market made more than $396 billion, with a projected compound annual growth rate of 7.7% from 2023 to 2027, according to Statista. 

Bordeaux, France, being called the “capital of gaming”, hosts the team of over 420 employees of Ubisoft, one of the largest video game publishers, with development studios across the globe. Its franchises including games like Assassin's Creed and Prince of Persia, among others, it is a name that, previously limited to a niche audience, is gaining global recognition by the minute. 

 
Sustainability  

Within the broader sustainability sector, specialised areas such as FoodTech, AgriTech, and – particularly in France – WineTech are gaining prominence. Faced with a growing global population and escalating environmental concerns, there is an urgent need for sustainable solutions in agriculture and food production. 
“The tendency is to transform business models. [...] We are seeing many start-ups – and even mature companies – emerge that have a positive impact on the environment. This creates a new form of competition, but also of inspiration and influence,” remarks Sylvain Guyoton, Chief Rating Officer of EcoVadis, in an article by Intelekto. 

These are no longer niche concepts; they have become mainstream preferences. Consumers are increasingly prioritising environmentally friendly and socially responsible products. 
As Laurent David, former Sales Director of Apple Europe and President of La WineTech, points out in an article by Terre de Vins “If France wants to remain the world leader in wine (in terms of value), it will have to innovate or risk stagnation and rapid overtaking.” 
Thanks to associations like La WineTech, innovative start-ups developing eco-responsible viticulture solutions have a platform on which to build their own ecosystem, allowing for faster networking and lucrative business opportunities. 

Furthermore, sustainability initiatives often emphasise supply chain resilience and transparency. By investing in these sectors, investors can support companies that implement technologies and practices ensuring a stable and efficient supply chain. This, in turn, mitigates risks associated with disruptions and enhances long-term financial performance.

However, the financial viewpoint on investment in sustainability sectors goes beyond the traditional risk-return analysis. Investments in these sectors offer a unique convergence of financial prosperity and positive societal impact. As sustainability becomes a key driver of consumer behavior, regulatory frameworks, and business strategies, investors attuned to these shifts can position themselves strategically to navigate a future where financial success is inseparable from environmental and social responsibility. 

Even considering the challenging market conditions of our current economy, the way is paved by lucrative prospects, as it is especially now, that the concepts that persevere – the ones “that stick” – unveil the real market tendencies, by distinguishing themselves as strategies that prove resilient and adaptable. 

Tomorrow reserves promising investment opportunities, with the constant emergence of innovative solutions. Evidently, the list is not exhaustive, as there are numerous other sectors poised for growth and development in times of great change.