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21 December 2021

Private Investment and Innovation

It is no secret that some of the most exciting companies around today are private. Businesses choosing to remain private is nothing new, but in today’s world of rapid technological innovation, many of the world’s most exciting businesses are staying private for longer.
 
Innovation is often what make private businesses so valuable, with many acting as pioneers in their industries. A host of private companies both new and old place innovation at the heart of their plans, including some visionaries known to be somewhat vocal when it comes to investments. It is clear that the private aerospace industry has taken off in recent years. Led by the vision of business heavyweights Elon Musk, Jeff Bezos and Richard Branson, SpaceX, Blue Origin and Virgin Galactic have all made important forays into chartered space flights.
 
SpaceX Founder and CEO Elon Musk has been the architect of an attractive business through the firm’s innovation and lofty ambitions, including a successful mission to transport two astronauts to the International Space Station (ISS) in May 2020, and the aim to crew a mission to Mars by 2024.
 
Innovation is arguably what makes the company such an exciting prospect. Unlike traditional rockets, those developed by SpaceX are reusable. Although the firm’s Falcon 9 and Falcon Heavy crafts cost US$62m and US$90m to book, respectively, they can be used as many as ten times, significantly reducing the overall cost.
 
Although SpaceX was recently valued at US$52bn by Morgan Stanley, Musk has suggested that SpaceX will remain private as the firm’s long-term goals don’t align with the short-term demands of retail investors.
 
While SpaceX is exciting as it has disrupted the aerospace sector since bursting onto the scene, some private firms in other industries are much more well-established. S.C. Johnson, the global company with a family of household cleaning brands under its umbrella, has grown steadily since being founded in 1886.
 
Many of its best-known innovations, including the brands Glade and Pledge, were developed in the firm’s Research Tower, in place at its US headquarters since 1950. By being well-established and diversifying its product offering in the long-term, the firm has become a well-respected player in its industry and, in doing so, has built a strong reputation for itself.
 
Over time, this reputation has led to the S.C Johnson family reaching a net worth of US$30bn, while its household cleaning products business has an estimated US$10.5bn in annual sales. The Group’s household products arm is just one branch of the business, but by evolving and innovating over the long-term, it has grown into a global, trusted brand.
 
To continue reading this article please visit the Autumn 2021 issue of 1875. To subscribe to our investment publications, please visit www.redmayne.co.uk/publications.

Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned. The value of investments and any income derived from them may go down as well as up and you could get back less than you invested.
 
Private Investment and Innovation
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