The hottest investor trends for 2015 include exciting new strategies designed to meet the challenges of a rapidly changing business climate head on. Topping the trends for 2015 are new ideas, such as pre-seed investing, and twists on traditional strategies that include changes in American’s retirement portfolios. Overall, 2015 is shaping up to be an exciting year for investors and business founders alike.
A NEW WAY TO FUND STARTUPS
Pre-seed investors garnered a lot of attention in the last half of 2014 and the trend continues in to 2015. The traditional way to finance a startup is to ask family and friends for money, apply for bank loans, find willing investors and sometimes mortgage the house. The appeal of pre-seed funding is that potential business founders need only a great idea, no product, prototype or proof of concept required. Pre-seed funds give founders the means to move from idea to launch and investors retain a stake in the new companies. Pre-seed funds are typically modest amounts designed to get a business through its first year.
INVESTORS AND SUSTAINABILITY
Socially responsible investing (SRI) is an increasingly popular form of ethical investing that promises to gain even more traction in 2015. Investing in socially conscious businesses is not a new idea, but its recent popularity is due in part to rising awareness and demand from the public at large. As more consumers choose to do business with socially responsible and ethical businesses, investors look for investments that combine financial returns with rising social awareness. According to the U.S. SIF, the Forum for Sustainable and Responsible Investment, by the end of the year 2013, more than $6.5 trillion was invested in accord with SRI strategies, a trend that will continue for the foreseeable future.
THE CHANGING RETIREMENT PORTFOLIO
Retirement accounts are the stalwarts of tradition. Ford Motor Company and General Electric shares are typical stocks found in individual retirement accounts and 401(k)s. A new trend is emerging, however where big money managers, including T. Rowe Price and Fidelity Investments, acquire shares in privately held tech companies. Shares are then pooled into mutual funds and end up in the retirement portfolios of millions. The appeal is obvious. Tech companies, such as Uber, Pinterest and Airbnb, are growing faster than those on the stock market and investment management companies want to cash in. Tech companies are not required to trade publicly or issue financial status reports, making speculative investments like these riskier. The question for 2015 is whether or not retirement account holders actually benefit from risky tech stocks or if the big winners are the investment management companies themselves.
THE TOP BILLION DOLLAR STARTUP INVESTORS
Forbes Magazine recently announced its list of top billion dollar investment companies that have the experience, strategies and records of accomplishment to fund 2015’s most promising startups. Included in the top five are Sequoia, Andreessen Horowitz and Greylock Partners.