INVESTMENT BANKING | 3 POINT PERSPECTIVE | INNOVATION EDGE
Hard Tech: The next frontier of growth
Contributor: Rob Brass
28 Sep 2022
Contributor: Rob Brass
28 Sep 2022
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Hard technologies, such as autonomous vehicles, robotics and additive manufacturing, are poised to disrupt a wide range of traditional industries, from manufacturing and logistics to automotive and food. As they transform these industries, they will likely attract VC and public investor interest. In this video, Rob Brass, our Head of Mobility and Frontier Technology Investment Banking, examines the impact of hard tech on the IPO market.
1. Hard tech is poised to disrupt traditional industries
The tech landscape is changing dramatically. A lot of hard, tangible technologies that were previously ignored are really starting to see their heyday.
Hard tech is probably affecting mobility the most right now because the way that we move people and goods has fundamentally changed, and continues to do so.
Robotics is not only disrupting, but also enabling a lot of traditional manufacturing industries, and in effect, it's controlling labour costs.
Additive, or 3D, manufacturing is changing the way that most businesses are thinking about developing and delivering products to the end market.
2. Private and public markets are on hiatus
On the investing side of the equation, we’ve noticed that venture capitalists and Round B and C investors are getting involved in hard tech, primarily focusing on unit economics. However, the IPO market has been challenged this year. Last year, there were about 120 tech IPOs, while this year there have been only six across all industries, and just one in technology.
Public markets have always offered great opportunities for companies to continue their evolution and capital raising process. But last year’s choppiness prompted many private companies to do other things such as extend their runway, reduce capital consumption, or go back to the private market again – often to inside investors – because they don't want to have to battle over valuations in the current environment.
3. Hard tech has a strong IPO pipeline
As the market returns to health and investors start to become more comfortable with equity values in the marketplace, we're likely to see more secondary offerings, as well as equity-linked issuances like convertible debt, for example.
Specifically, technology IPOs have a very strong pipeline, and a lot of the hard tech companies to which we refer in concept are going to actually lead the way for the next class of IPOs in technology.
Whether it’s mobility, robotics, additive manufacturing or the plethora of other technologies capturing investors’ attention, we are very optimistic about hard technologies and believe they are going to define the technology landscape going forward.
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About the expert
Head of Mobility and Frontier Technology Investment Banking
Robert Brass is Head of Mobility and Frontier Technology Investment Banking, based in Menlo Park, California. Rob focuses on companies in mobility and other emerging technology segments. Mobility includes electric vehicles and infrastructure, autonomous vehicles and systems, micro-mobility solutions, batteries, drones and components. Frontier verticals include robotics, additive/3D manufacturing, connected fitness, consumer electronics and AR/VR/optics. Rob has more than 20 years of investment banking experience, during which time he has taken more than 40 companies public, raised more than $20bn in financing and executed more than $300bn in M&A transactions across technology verticals.