With Cameron Lester, Global Co-Head of Technology, Media and Telecom Investment Banking
The tech sector stands at a crossroads. For the first time, the industry faces both a significant downturn in capital availability and a historic wave of digital disruptions. This unusual juxtaposition of innovation and fiscal tightening creates challenges and opportunities for entrepreneurs and investors alike.
At Jefferies’ 2023 Private Internet Conference, Cameron Lester, Global Co-Head of Technology, Media, and Telecom Investment Banking, expressed bullishness on the future of the sector, despite recent financial tightening. His optimism stems from areas of continued growth and groundbreaking innovation, including artificial intelligence (AI), e-commerce, and the creator economy.
“This funding environment creates certain advantages for entrepreneurs, as talent and capital converge around the best ideas,” Lester said. “Companies will sustain growth and secure funding if they can position themselves as future leaders with a sustainable business model and innovative mindset."
Artificial Intelligence: The Next Frontier
Lester considers AI the most impactful tech innovation since search engines, with the potential to eclipse even that. He expects it to revolutionize business and consumer environments for generations to come.
Reflecting on OpenAI’s success, Lester noted, “When ChatGPT was released, it amassed 100 million monthly active users in just two months – outpacing WhatsApp, Instagram, and Facebook. Generative AI, practically unknown to the public just months ago, is now emerging as part of the fastest-growing tech platform in history.”
AI’s growth has attracted robust investment, with venture capital funding increasing 11-fold since 2018. Forecasts suggest the AI market could attract $110 billion by 2030. As industry leaders like Google, Amazon, Meta, and Microsoft invest in AI, the sector offers an excellent opportunity for entrepreneurs and investors.
E-Commerce: The Pandemic’s Legacy
Lester also expressed confidence in the sustained growth of e-commerce, a sector that expanded dramatically during the COVID-19 pandemic and shows no signs of slowing down.
“Before the pandemic, e-commerce accounted for just 15% of total retail in the United States,” Lester shared. “The shift to online shopping during the pandemic was expected, but the persistence of these habits is remarkable.”
In 2022, e-commerce sales hit $1 trillion for the first time. Despite the resumption of in-person shopping, e-commerce has maintained strong growth, now representing more than 20% of total U.S. retail. Even older consumers, historically hesitant to adopt e-commerce, now represent the third-largest e-commerce demographic, with over 35 million online shoppers.
Digital resale is another rising trend, expected to grow 80% over the next five years. The sector is projected to reach $300 billion by 2027, outpacing overall e-commerce growth.
The Creator Economy: A Maturing Market
The creator economy is gaining momentum. The market reached $104 billion in 2020, doubling its value from 2019, and today, there are more than 50 million digital content creators around the world.
"Rather than ten TV shows consumed by billions of people, we now have hundreds of millions of shows catering to billions of people," Lester shared, quoting Eric Freytag from Stream Labs.
While creative industries were historically dominated by large players, platforms like Patreon, TikTok, and OnlyFans have democratized the sector. These platforms allow individuals to reach large audiences and monetize their talents, without the backing of major tech companies.
Lester also noted the sector’s unique cultural influence, with ‘YouTube star’ among the most sought-after career choices for today's youth.
Despite capital scarcity, Lester remains optimistic about the tech sector’s future. The industry is on the brink of an exciting new phase, as various sectors attract talented entrepreneurs and enduring investor interest. Lester believes that as long as entrepreneurs and investors seize current opportunities, innovation and growth will persist.
“Yes, capital is scarce, but these land grabs often give rise to an abundance of new opportunities,” Lester said. “When macro headwinds subside, expect plenty of capital to flow toward these emerging sectors.”
