Despite current market conditions, investors have a record amount of capital – an estimated $230 billion of dry powder — stocked away. They just have to find the right place to deploy it.
Despite the gloom, doom, and scramble for yield, one sector is too often overlooked by investors, where backing technology will produce returns no matter the state of the economy: government spending in tech.
What’s more, much of government spending is focused on areas critical to society, such as climate science, disaster response, healthcare, national security, and education.
The United States is currently in its most significant financing sprint since WWII. It’s a spending program the size of the Marshall Plan for domestic tech innovation, and most investors aren’t paying attention. In fact, the total amount of government spending, when adjusted for inflation, exceeds the entire amount America spent fighting World War II by 130%.
States are looking, and in some cases required, to broaden their perspective and find solutions to the problems the previous generation failed to solve.
For decades, however, sector-focused investors have either ignored or been mystified by the public sector, unable to match their innovation to its needs. The lack of product-market fit combined with a lack of understanding of the inner workings of government has inhibited true innovation and left billions of dollars in opportunity walled off.
The key to unlocking these resources is understanding what the priorities for investment are, and how to access them.
The biggest mistake investors make is focusing so much on the federal government that they can’t see that the bulk of federal spending flows through states. For instance, the response to the COVID-19 pandemic and the Infrastructure Investment and Jobs Act together amount to trillions of dollars.