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How to find investment opportunities in growth companies?

Updated: Jul 4, 2022

Daniel Isaacs, co-founder of Sircular, gives his concrete tips for finding the growth companies of the future.

"The future lies in the hands of entrepreneurs and profitable companies with a positive impact on our world"

Recent years, the values ​​of tech companies have been high and exponential growth almost expected. The stock market had a historic upswing during 2021 and we saw records in the number of IPOs. Despite seemingly favorable conditions, two thirds of the companies fell in value after the listing.

With that fresh in mind, this year's initially high values ​​on the stock market in general and in the tech companies in particular, were wishful thinking. The stock market has received a much needed cool down, driven by high volatility, war in Europe, high inflation, declining growth and central banks tightening the world economy.

But what is the future without technology?

Regardless of the bubble we saw in tech companies during the spring, technology will be the driving factor going forward. The exponentially rapid technological development is here to stay and the pace of development will increase. The difference lies in how the technology is used and what value it creates.

“The future lies in the hands of fast-thinking companies and entrepreneurs. In our collaboration with Norrsken, one of the world's largest accelerators, all focus is on companies that have a positive impact on our world. It will be a decisive factor for companies of the future, says Daniel Isaacs “

Companies that have a positive impact on sustainability are often referred to as impact companies, ie companies that develop sustainable solutions to global problems. Interest in impact companies continue to increase in Sweden, where Fondbolagens förening reports that the assets in impact funds have tripled during the period 2016-2020.

Sircular has over 2,000 startups, investors and accelerators in the platform. In 2022, cohorts were carried out with Norrsken Impact Accelerator, Invest Stockholm, + Impact (Danske Bank) and Time to Raise. Our service was also used during Sthlm Fintech week, where the tool was used to list fintech companies with greatest potential. Through the collaboration with leading accelerators and unique matchmaking between startups and investors, we see a clear trend for the future:

"The company that can combine sustainability, profitability and long-term will be interesting to attract capital and grow over time," continues Daniel Isaacs

5 tips on how to invest in the growth companies:

Impact companies are a guide.

The company that found a solution to a global or regional problem that can be linked to one of the UN's 17 global goals, will be interesting. Impact companies will also be important guides for larger companies to collaborate across borders, find new ways of working and create sustainable value chains.

Long-term perspective and profitability are the key.

In addition to having sustainability in focus, the company needs to have the strategic management in place to be able to grow over time. Long-term thinking and a plan to achieve profitability are important factors. Here, the impact companies have a lot to learn from traditional and profitable companies where vision, strategy and goals often are clearly defined key figures. Make sure you understand how the company will grow in the long term and what strategy is set to make money and achieve profitability.

Reduce human footprint.

The companies that can reduce the human footprint in the world and make our everyday consumption more sustainable, have everything to gain. Technology companies that are in spotlight in the cohorts that Sircular has carried out with Norrsken, DanskeBank and Invest Stockholm operate in agritech, foodtech, greentech and proptech, ie companies that contribute to improving distribution and sustainable alternatives for food as well as renewable electricity and digitalisation of properties and property management.

Invest in what you understand.

It is important that you understand how the company creates value in the market. Could you use the product yourself or easily describe it to someone else. By understanding how the company creates value for its market, it is easier to evaluate the long-term and potential for future growth.

Spread the risk.

An investment always involves a risk. Investing in unlisted companies involves an increased risk, since access to information may be limited. The risk must always be conscious and part of a well balanced investment strategy with different asset classes across different industries, regions and instruments.

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