The Future of Virtual Reality in Education

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A group of friends gather around a table to play Uno. A race car driver takes a sharp turn on a dirt track, barely managing to stay on the road. A surgeon tries desperately yet delicately to perform a heart transplant. These may just sound like scenes from a movie or even everyday life, but there’s one distinct difference: all of these are player-controlled actions from video games steeped in virtual reality – the current wave of the future for simulation, and one that is able to take the education sector by storm, if it hasn’t started already.

From Amusement to Education

While the origin of what can be defined as “virtual reality” may be up for debate (some may consider the panoramic paintings of the nineteenth century the first true instances, given they immerse the viewer in a different, simulated environment than the one the viewer is currently in), by the 1960s, VR advances were relegated strictly to entertainment, with the View-Master and 3D movies both incredibly popular. That began to change in 1968, however, when a team at MIT’s Lincoln Laboratory developed “The Sword of Damocles” – so named given its monstrous size and need to be hung to the ceiling thanks to its weight. Much more importantly, however, it is considered the first head-mounted, computer-powered VR system, paving the way for VR to expand into fields beyond entertainment.

Several decades later, and virtual reality systems finally have become lightweight enough and cheap enough for the general public to purchase and use for personal entertainment, with the HTC Vive and Oculus Rift systems available on Amazon and “VR cafes” popping up around the globe. With the cost and weight reduction, however, the technology has also seen an escalation of use in the business sector, in notable industries such as aerospace, medical, automotive, and most importantly, education. In fact, the technology may be so beneficial to the education field that it could be considered vital, if not now, then soon. Peter Rubin, writing for Wired about the subject, put it best: “Virtual reality is much more than a gaming technology. In fact, VR has the makings of a pedagogical silver bullet.”¹

The bottom line is this: implementation of VR positively affects the outcomes of students, especially those from lower socioeconomic backgrounds. It has always been challenging to engage this grouping as they are most often deficient in writing and math skills and require remediation so that they are able to understand the mechanical properties of today’s technical oriented Vocational programs. Virtual Reality levels the playing field, engaging students in an immersive learning environment with visual and tactile repetitive stimuli which replicate a real-world working experience and provide equivalent learning opportunities to all.

VR, when implemented, will increase revenue per student and student populations, reduce dropout rates, enhance the excitement of training, provide for student independent skill practice, increase graduation rates, augment student referrals, and increase the EBITDA of a school. Of course, the technology is not all roses, as there are factors such as health risks, overall costs, and the sheer nascent nature of the technology to take into account. Yet in the end, the numerous pros coupled with the already emerging trend of VR implementation outweigh any of the possible cons. And that’s a virtual certainty.

Note: while virtual reality will remain the central focus, AR, or “augmented reality,” will also be discussed in relation to education or training when necessary. The difference between the two is that virtual reality is an all-encompassing simulation of an environment, while augmented reality is a system that blends a real-world environment with virtual objects or images.

Crunching the Numbers

Before anything else, a look at the statistics behind VR technology is necessary – and also head-spinning:

  • Education is expected to be the fourth largest sector for VR investment.
  • VR in education is predicted to be a $200 million industry by 2020, and a $700 million industry by 2025.
  • 97% of students would like to study a VR course.
  • While only about 7% of teachers regularly use VR technology, almost 80% have access to it, 93% said that their students would be excited to use it, 70% want to use it to simulate experiences relevant to course material, and 69% would allow students to use VR to visit distant locations.
  • 49% of high school teachers would like to use VR to allow students to visit college campuses.²
  • Over 90% of educators agreed that using technology is an effective way to provide differentiated and/or personalized learning experiences that adapt to student needs.³
  • In addition, with regard to the health care field, virtual reality revenue is valued globally at $260.5 million in 2018 and is expected to reach $3.44 billion by 2027.4

From this data, two points can be extracted: virtual reality is a hot economic commodity as the technology just recently has become affordable and available, and that while the market for VR is one nascent and with limitless possibilities and anticipation with regard to the educational sector, it is one that, for the most part, still desperately needs to be tapped into.
That isn’t to say, however, that some institutions and fields haven’t already leapt ahead of the curve.

Virtual Reality in the Vocational Sector and Occupational Training

In hands-on career fields such as automotive maintenance, aerospace, HVAC, and medicine and therapy, VR and AR are proving both popular and beneficial both in vocational education, and occupational training. Students at Pennsylvania State University – Altoona’s rail transportation engineering program, for example, have access to VR tech that allows them to practice types of arc welding, with plans for a locomotive simulator to teach students how to operate a locomotive. Meanwhile, VR in HVAC and construction industry has allowed workers, engineers, and architects to explore spaces, models, and designs in anticipation for the actual construction of systems. This trend is even reaching high school vocational courses; Manor High School in Manor, TX, for example, has incorporated AR into its automotive and welding training to give students hands-on experience with minimal risk of real-world injury or mistake via programs that allow the students to pull virtual parts and systems into the air to take apart and modify.

The aerospace sector, too, has benefited from virtual reality, with newer VR pilot training programs not only replicating the interior of an airplane cockpit, but also replicating the touch and feel of it via sensors attached to fingertips, allowing a trainee total hands-on interactivity. NASA, too, has adopted such technology for spaceflight, with their Project Sidekick equipping astronauts with Microsoft HoloLens which “augments standalone procedures with animated holographic illustrations displayed on top of the objects with which the crew is interacting” and may end up reducing time needed for pre-flight training.5

One of the more publicized sectors for virtual reality, however, has been that of medicine and therapy – and not merely on the physician side of things. The effectiveness of virtual reality has been applied to helping children with autism with social interaction and nonverbal cues, training potential users of power wheelchairs, rehabilitating one’s upper arm after a stroke, and even performing “tele-therapy” in a simulated environment. In addition, VR has been making inroads as a medical training aid for university students to tackle clinical procedures or emergency scenarios, such as at the Western University of Health Sciences in California, Western Carolina University’s School of Nursing, and the University of Nebraska Medical Center. Thus, not only is virtual and augmented reality technology aiding in training the workforce of this generation and those to come, but it is also helping people with medical needs to live normal lives, highlighting its importance for the future.

Virtual Reality in Higher Education

VR and AR are also making inroads into traditional higher education in various ways at a number of different institutions. For a few out of numerous examples:

  • The Gabelli School of Business at New York’s Fordham University is utilizing VR exercises in its Execute MBA program to help them understand the power of communication and teamwork, utilizing simulated life-or-death scenarios such as walking across a balance beam thousands of feet in the air while urged on by team members, and selecting a person to defuse a bomb while the others instruct him or her.
  • Maine’s Husson University is using augmented reality tech to develop an app titled AR Stagecraft, allowing entertainment production students to visualize and modify a set on stage before any of it has ever been built.
  • San Diego State University has developed and built the Virtual Immersive Teaching and Learning (VITaL) space for its students and faculty, using both virtual and augmented reality as education aids for 30 courses.
  • The Savannah College of Art and Design has utilized virtual reality beyond just its courses. The school has begun sending Google Cardboard VR glasses in its acceptance letters, allowing students to pair the glasses with a smartphone so they can take a virtual tour of SCAD’s campus from thousands of miles away.

In addition, virtual reality may prove beneficial for educating the general public outside of the education system. The arts collective Bombshelltoe, for example, has utilized the technology to show people how a 1979 uranium mill spill has altered land near Churchrock, New Mexico. Capturing 360-degree footage and compiling it into a film titled “Ways of Knowing,” the collective has attempted to show how the 94 million gallons of radioactive waste spilled into a nearby river have altered the land over the past few decades via this immersive experience.

Even then, the technology is still available right at everyone’s fingertips with smartphone apps that can pair with relatively cheap VR glasses (like with SCAD’s Google Cardboard) to give the user an educational experience, such as with numerous public speaking apps available that allow the user to simulate numerous environments and scenarios which allow them to practice giving a public presentation or speech, attending a business networking meeting, or even practicing for a job interview. With smartphones being totally commonplace in today’s day and age, apps for them being able to be developed by anybody, and simplistic and affordable (if not necessarily high-tech) VR glasses readily available, the possibilities with virtual and augmented reality are decidedly limitless.

Problems with Virtual Reality

Of course, nothing in this world is perfect. While a “pedagogical silver bullet” with many beneficial applications and economic and social success, virtual reality nonetheless comes with its own fair share of problems, including those that may affect a person’s well-being. According to Samuel Greengard, the laundry list of possible side effects “if [a virtual environment] is too realistic” includes “dizziness, nausea, disorientation, panic, or even a medical problem such as a stroke or heart attack.”6 Meanwhile, as described in Virtual Reality and Augmented Reality: Myths and Realities, “the use of [head-mounted VR devices], by nature, poses problems of comfort and health,” not in the least of which are addiction (though that may be less probable when VR is used for education or training than for entertainment), provocation of eye problems, or even long-term ocular damage thanks to prolonged exposure to the light emitted from the devices.7

These ocular nightmares are due in part to the lack of standardization among virtual reality systems, and few customization or adjustment options on individual devices – the former proving notably problematic in the fields of therapy and medicine, where a range of disabilities and health conditions require unique needs and interactions even more so than the general populace. In addition, while the context of use may not be a problem, it may be “an important consideration” depending on the field, as a professional setting may have the space for more advanced, full-body capture VR systems that are “likely to be impractical for home use” compared to basic head-mounted systems or simple VR glasses.8

Less immediate and more overarching are the social and legal consequences of VR – most of which are either unknown or not concrete given how recently VR has become widely available. As virtual reality simulations become more advanced with multiuser compatibility and worlds linked through the internet, would simple “street crimes” like “disturbing the peace, indecent exposure, and dishing out deliberately harmful visuals or other stimuli” have real-world legal repercussions were they to leak into virtual via hacking or other means?9 Would impersonation of another person or disputes over in-simulation avatars and likenesses lead to legal action? Such questions are still up for debate.

Finally, the last major obstacle comes in the form of cost. While readily commercially available nowadays, VR systems still cost hundreds of dollars for all the necessary and recommended equipment, such as the headset apparatus, controllers, and cables – and that’s just for one system. As Sarah Schwartz explains in Education Week with regard to a conference for the International Society for Technology in Education, “the technology can be expensive for cash-strapped districts,” with one of the educators in attendance commenting that the cost is “the biggest barrier” for expansion and “a significant expense for his district.”10 Even as cheap as VR glasses are, they may not suffice for more complex simulations, and would fail to capture a full experience if it requires the use of one’s hands or body.

Conclusion

In the end, nonetheless, most of these downsides can be attributed to the nascent state of VR for public use at the moment, with the benefits far outweighing any possible problems. The technology, while not universal, is still being implemented gradually and to great success in the various educational and training fields after decades of improvement – and it shows no signs of slowing down.

Writing for the Motley Fool, Travis Hoium states that while VR “is already a multibillion-dollar business” with 4.7 million headsets sold in 2018 alone according to Statista, the technology “has only scratched the surface of its potential.”11 Fellow Motley Fool writer Chris Neiger agrees, listing off that while the VR market was worth just $1.8 billion in 2016, projections for 2025 have the market exploding in value. With estimates of its 2025 worth ranging from $7.5 billion, to $22.5 billion, all the way up to $48.5 billion, “virtual reality is poised for huge growth no matter which estimate is more accurate,” and investing into any facet of it or any of the companies currently competing or showing interest in the VR/AR market – Alphabet, Facebook, Sony, et cetera – would be economically wise, even if it may take at least five to ten years for the market to take off according to Facebook CEO Mark Zuckerberg.12 An investment for the long-term, certainly, but one with projected exponential growth over the course of the next several years and a bright future ahead. Likewise, investments by for-profit institutions in a VR teaching infrastructure will significantly influence their student outcomes, institutional growth, market reputation and will significantly involve bottom line R.O.I.

Thus, the bottom line: if you’re not already researching or investing into the technology, you’re already behind the times. With both projections and expectations high and numerous institutions already implementing virtual and augmented reality systems in a range of fields, why haven’t you looked to the future yet?

SOURCES:

  1. Peter Rubin. “Field Trip.Wired. September 2019. 33.
  2. Virtual Reality in Education in 2017 Infographic.” eLearning Infographics. June 6, 2017.
  3. Educators Believe Educational Technology Can Personalize Learning— And Want Additional Support in Training and Professional Development
  4. Global Virtual Reality in Healthcare Market is Expected to Reach US$ 3,441.4 Million by 2027, Growing at an Estimated CAGR of 33.2% Over the Forecast Period as Hospitals are Implementing Virtual Reality for Operational Efficiency, Says Absolute Markets Insights.” PR Newswire. July 10, 2019.
  5. NASA, Microsoft Collaborate to Bring Science Fiction to Science Fact.” June 25, 2015.
  6. Samuel Greengard. Virtual Reality. MIT Press: Cambridge, MA, 2019. 121–122.
  7. Ed. Bruno Arnaldi, Pascal Guitton, and Guillaume Moreau. Virtual Reality and Augmented Reality: Myths and Realities. Wiley-ISTE: London, May 2018. 275–276.
  8. Ed. Joav Merrick, Wendy Powell, Albert Rizzo, & Paul M. Sharkey. Virtual Reality: Recent Advances in Virtual Rehabilitation System Design. Nova Science Publishers: New York, 2017. 5.
  9. Greengard. Virtual Reality. 136.
  10. Sarah Schwartz. “Educators Share Hopes, Concerns About Virtual Reality at ISTE.” Education Week. June 26, 2018.
  11. Travis Hoium. “What You Need to Know About Investing in Virtual Reality Technology.” The Motley Fool. August 27, 2019.
  12. Chris Neiger. “6-Point Checklist for Investing in Virtual Reality.” The Motley Fool. August 17, 2017.
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Private Equity and Venture Finance in MENA: Back to the Future

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The Middle East has a history of breeding amazing entrepreneurs the world over. One thing though that remains in short supply, in my personal opinion, is the buildout of a Team Spirit. I strongly believe in the fact that there’s still plenty of money and private equity capital available around the globe. Yet currency alone may be inapt to cultivate great entrepreneurs gelling to form great teams. A company’s biggest challenge and biggest advantage is and has indeed always been the team behind it – The right people with the right talent backing opportunities as they emerge, continually win. There is no secret sauce. The “cult of the personality” has clearly taught us all a lesson we are not about to forget anytime soon.

The Birth and Growth of Private Equity in MENA Unlike the United States, where the seeds of a fledging and flourishing PE industry were planted as far back as 1946, the Middle East has a short and tumultuous history. The emergence of PE in the MENA region made its ostentatious debut in the 1990’s.

The asset class was well-received, gaining the attention and interest of local – primarily GCC based – limited partners (LPs) which led to the establishment of many first-time funds successfully raising sizable pools of capital in a relatively short time period. By 2007, the funds raised for regional investments reached $6 billion. They unfortunately fell dramatically after a stable period between 2013-2016 to around $2 billion today according to Bloomberg.

One of the major setbacks to the industry was the recent saga of the Abraaj Group which collapsed in Dubai and left a dry deal landscape for regional-based PE firms. The saga though didn’t keep foreign private equity money away from the United Arab Emirates entirely.

Let’s be honest, the challenges, a bumpy evolution and such scandal is not limited to the region, as the US and Europe have had their fair share of capital chaos. Due to the asset class in the region being fairly nascent with few players, these events tend to be accentuated and overpublicized. In fact, foreign investors are as active as ever in the region.

This year alone, New York-based KKR & Co. and BlackRock Inc. agreed to invest $4 billion in Abu Dhabi’s oil pipelines, while London-based CVC Capital Partners agreed to buy a 3 percent stake in private schools’ operator GEMS Education. Prior, Carlyle Group’s $51.3 million investment in Jordan’s frozen food producer – Al Nabil Food Industries – posted a 40 percent cumulative gain. Not to mention the largest exits in the region’s history – famed acquisitions of Maktoob, Careem and Souq by Yahoo!, Uber and Amazon respectively.

Current State of Affairs Overall though, it is a fact that the downfall of Abraaj Group didn’t just kill the private equity firm Arif Naqvi built in Dubai. It crippled the entire market.

Since Abraaj’s swift and spectacular demise was set in motion almost two years ago, funds went from flourishing to finite in which there was virtually no money raised by private equity firms based in the Gulf Cooperation Council despite strong performance by PE firms almost everywhere else, according to Seattle-based data provider PitchBook and London-based Preqin. Although Jordan, the UAE and Lebanon are still the centers of influence for PE and VC in the MENA region, some drastic policy measures and recommendations are in order with some underway in these countries and others as well to turn the tide and create a MENA powerhouse.

A close look at the private equity industry in MENA shows us indeed that it has faced a succession of setbacks over the last 15 years – which few players are still ready to accept – and some thorny geopolitical issues may be creating new uncertainties despite the fact that the current roster of firms active in the region still consist of seasoned professionals who have negotiated previous waves of political and economic volatility and created value in the process.

Also, despite the industry’s small size, reported deal performance on both a gross IRR and cash multiple basis is good, proving that in spite of all the headwinds, private equity firms focused on the MENA region have been able to both source high-quality investments and generate returns.

One should hence take confidence from the past experience that the region’s fund managers will be able to navigate the next wave of challenges. But there is more to the story.

While the rapidly growing youth population is a potential boon for firms focused on consumer goods, services, healthcare and education, it’s requiring governments to achieve levels of economic growth capable of putting all of these young people to work.

The region still suffers from a dearth of finance available for businesses, particularly small-and medium-sized enterprises, as well as insufficient management expertise to take companies to their next stage of development. Private capital can bridge these gaps by providing expansion capital, by helping businesses grow in line with international standards, by connecting these companies to new markets, and ultimately by creating licit opportunities for the region’s youth to earn a living in the formal economy. Government though has to play its part too. Regional policy and practices unfolding in the region at large to address this gap are promising, particularly among the influential hubs for PE and VC (Jordan, UAE and Lebanon). However, there is still ample room for advancements where acknowledgement and meaningful action prove vital.

As governments across the Middle East and North Africa increasingly appreciate this connection, they should start much more aggressively to actively engage private sector partners. Nearly all regional governments have come to realize that youth employment is critical to stability, and that they alone cannot employ the waves of young people coming into the workforce. Unless leaders get the private sector side of the equation correct-and allow the private sector to develop and drive job growth-a world of turbulence will likely ensue.

Bottom Line: Private equity remains grossly underutilized, with private equity investment as a percentage of GDP weighing in at just 0.2% for the MENA region in 2018. In an environment where newsfeeds carry more headlines of destruction than construction, private capital can be a substantial positive agent of change. By partnering with local entrepreneurs and building better businesses, the private equity industry can also help the region build a much brighter future.

Capital Access Recommendations

Recommendations for policymakers:

  1.  Design policies and programs to fit the “reality” of business: It is a fact that government policies at large are not well understood or utilized by businesses and fail to provide the competitive price, accessibility, and certainty that businesses look for when seeking capital. For these policies and programs to achieve their stated goals, policymakers should structure them to meet the specific needs of business or consider enhancing and expanding collaboration with private-sector capital providers to leverage those providers’ expertise and capabilities. This may necessitate agility and better integration to streamline efforts across, often dispersed, programs.
  2.  Expand entrepreneurial education of capital options: Even if a source of capital is a good match for the needs of business, it won’t be utilized without substantial awareness among target enterprises. Policymakers should encourage educational programs that help inform businesses, nonprofits, and government agencies of all sizes of the different capital access options, as well as their costs, benefits, and requirements. This could be a direct government effort, but it may be more effective and efficient to partner with nonprofits, global institutions and business organizations focused on improving capital access.

Recommendations for capital providers:

  1. Develop a relationship with clients: A positive relationship is a major driver of clients. It behooves one to get to know them and develop a positive relationship. This will not only help make the relationship “sticky” but will also help in understanding the needs and trends in the market, positioning providers to better adjust as the market changes.
  2.  Consider strategic partnerships: Leaders may not be able or willing to provide capital to all companies; however, even if it’s not possible to deliver on all the necessary services, through the use of strategic partnerships they can preserve the presence of a company within their respective relationship umbrella. Financial technology alone has little meaning unless there is underlying value. In order to create jobs and real prosperity, financial technology must act on other factors; and none is more important than human capital. Once again, “Human Capital” and the burgeoning of “Team Spirit” is the essence of all.

* Zana Nesheiwat is CEO of BrandZA, Inc., Partner at Blackhawk Partners, Inc.and wealth-curator charged with building valuable brand assets, originating and optimizing strong partnerships, and advancing investment opportunities that benefit all stakeholders.

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Venture Finance in the MENA Region: Challenges and Opportunities Ahead

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I recently had the pleasure and honor of participating in the Digital Mashraq Forum (DMF) under the patronage of HRH Crown Prince Al Hussein Bin Abdullah II, the Ministry of Digital Economy and Entrepreneurship in Jordan and the World Bank Group.
The high-level affair to discuss the future of digitalization in the region attracted upwards of 500 attendees from public and private organizations across 25 countries. The DMF hosted a VIP pre-reception and an immersive two-day program with 26 panels, 69 speakers, 40 startups and 22 investors on board. A commendable success to orchestrate such a powerful platform.

The caliber of men and women was unexpected, to say the least. It was most certainly a remarkable experience to be surrounded by so many educated, talented, sophisticated, pleasant, informed, ambitious, engaged and relentless humans for three days.

Although a regional event, it was without a doubt global. Entrepreneurs, companies, VCs and public officials from MENA, Europe, Asia, Africa and throughout the US all doing great things.

Back in Business: Ripe, Rich and Ready

It is no secret – The Kingdom of Jordan is on the brink of breaking through bureaucracy to bring in billions of dollars and it’s only a day away. The events taking place are defying the antiquated sentiments that postulate a lack of resources as an uncontended culprit preventing a rapid evolution to modern economic and social systems. The fact is there is abundant capital and it’s high-time this wealth is unlocked and effectively allocated to achieve its full impact-potential.

Public-Private Partnerships

Once again, it is as much about the caliber of people and companies and the ambitious agenda the DMF sets to advance as what it symbolizes. The conference concluded with the release of “Amman Communique,” announcing Jordan’s plan to launch a regulatory reform process and digital transformation strategy by the end of 2019 to improve the Kingdom’s business environment. The communique also addressed the government’s commitment to open the National Broadband Network (7,000 kilometers of fiber) for public-private partnerships (PPP).

For Jordan, the meeting was one of many recent government-backed initiatives that emphasize its commitment to back and empower entrepreneurs, create a conducive business environment, and advance robust public-private cooperation.

The Role of the Central Bank

My partners at Blackhawk and I strongly believe the Central Bank of Jordan can serve a fundamental role in leading a PPP that will open up the flood gates of capital.

Consider Lebanon, a neighboring country in the Levant, that instituted an impactful PPP model. In 2014, The Banque du Liban (Central Bank of Lebanon) introduced Circular 331 to bolster the Lebanese ‘Knowledge Economy.’ It is proving effective despite the Central Bank’s massive debt and the country’s stormy geopolitical climate.

In fact, Circular 331 which encourages commercial banks to invest in startups is clearly one of the boldest and smartest initiatives undertaken so far by the Lebanese government. For the uninformed, the Central Bank now guarantees up to 75 percent of the value of a commercial bank’s investments into a startup. That move opened up a potential of $400 million that could be invested into venture capital funds or directly into startups. Circular 331 has clearly taken it up a notch by encouraging venture financing.

This model can be similarly emulated in Jordan to open up the flood gates of capital second to none; especially given the fact that Jordan has half the Debt/GDP ratio of Lebanon.

The Flood Gates of Capital

Purposing a public-private partnership of this magnitude to create professionally managed pools of capital in Jordan will create an octopus of opportunities:

  1. More Capital: The capital injection will increase the number and variety of VCs which would in turn fund and empower more entrepreneurs.
  2. Take Jordanian Companies Global: Such program would establish new VCs of the highest caliber with qualified experience that not only meet local-standards but have the aptitude to fair-well globally was well. More globally competitive VC’s mean more globally competitive companies.
  3. Larger Pools of Capital: It will serve to develop and expand the current VC system exponentially. Most VCs in Jordan today are basically restricted, for the large part, to seed-stage. This opportunity would allocate capital to equip new VCs to mature and develop seed to later-stage companies. Larger VC pools of capital will serve to accelerate the growth and scalability of the companies they fund, positioning them compete in global markets.
  4. Empowered Entrepreneurs: With new VCs and larger funds, a whole new spectrum of entrepreneurs will have access to capital. Consider the shift in dynamics that would follow – Consider companies or entrepreneurs that don’t conform to their capital providers but are forced to comply to secure their financial survival. This desperation leads to discouragement which in turn stifles individual potential and the evolution of their enterprise. A robust VC model will pierce this paralysis and protect innovation capital, a source of national wealth.
  5. Green Light for Foreign Investment: This government-backed initiative gives outsiders the greenlight – Jordan is open for business. The blessing and support of the Kingdom boosts investor confidence, garners respect from national leaders and will certainly serve in reaching their FDI targets, probably overnight.

Looking Ahead

Make no mistake about it. At the end of the day, it all boils down to access to professionally managed pools of capital that can make a real dent in the marketplace. You can have the smartest and most educated entrepreneurs on the planet but without “smart” capital backing them, their projects are nothing but a pie in the sky. Silicon Valley is a prime example in this regard. Without Sand Hill Road backing the entrepreneurial spirit and companies of the Valley back in the early 80s and 90s, the tech giants of today would have never existed.

Just as it has in the United States, the worldwide democratization of capital will democratize industrial assets and produce an explosion of job creation the world over. The MENA region needs this more than any region in the world. And the capital revolution, which so changed America in the last third of the 20th century, is only the prelude to the other two major revolutions of the 21st century — the worldwide democratization of venture financing and of knowledge. These three revolutions, each aided by emerging technology, provide hope that the 21st century will be able to avoid the terrible Middle East conflicts of the past hundred years and become a new Age of Enlightenment. Our children won’t have opportunities unless there are opportunities for everyone.

*Zana Nesheiwat is a Partner and wealth-curator at Blackhawk Partners, Inc. charged with building valuable brand assets, originating and optimizing strong partnerships, and advancing investment opportunities that benefit all stakeholders.

Blackhawk Partners Inc. is a New York based private “family office” that is in the business of originating, structuring and acting as equity investor in management-led buyouts, strategic minority equity investments, equity private placements, consolidations and buildups, and growth capital financings for both US and emerging market companies at all stages.

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The U.S Must Win the 5G Race by Any Means Necessary

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WHAT IS 5G?

5G stands for fifth generation cellular wireless. 5G will introduce three new revolutionary features in our world: exponentially greater wireless Internet speed (up to 100x faster than the current 4G), lower latency (will be more responsive), and the ability to connect lots of devices at once (for sensors and smart devices). To give an example, with 4G it would take 6 minutes to download a 2-hour movie. With 5G, it will take all of 3.6 seconds.

The race to 5G is a race that will dictate the world leaders of the next decade. For example, when US won the race to 4G in 2010, US experienced tremendous economic and job growth. 4G technology allowed the US wireless industry to increase related jobs by 84% from 2011 to 2014, which added $125 billion in revenue to American companies, with $40 billion coming from app stores. The first 4G phones in the US appeared in 2010, which enabled 4G applications that changed our world, such as Snapchat, Uber, AirBnB, video calls, etc. If the US would’ve lost this race, these industries, advances in technologies and revenues would have gone to other countries.

As the world’s long-time leader, the US wireless technology industry employs almost five million professionals and contributes $475 billion per year to the American economy. Winning the 5G race could cause those numbers to explode in the near future. Studies show that 5G has is likely to create almost three million new jobs— and add $500 billion to US economic growth. It is a big deal.

5G IMPORTANCE ON ECONOMY/WORLD/COMPETITION

As our world turns digital, wireless technology becomes the most important competitive advantage between nations. The race to 5G is the most important thus far because our essential infrastructure in this country will be built using wireless technology. Our civic, commercial and military life depends on it.

100x faster wireless speed than 4G and reduced latency, will allow us to exponentially improve our connection with all devices. This will create new opportunities in manufacturing, transportation, health care, education, agriculture, and more. 5G will enable new services that will drive economic growth and job creation for years to come.

Historically, Europe won the 2G era, Japan won the 3G era, and of course, the US won the 4G era. But now, China poses a severe threat to winning the 5G era, which will have countless negative implications for the U.S. At a hearing before the Senate Committee on Commerce, Science, and Transportation in 2018, Mississippi Sen. Roger Wicker stated that “failing to win the race to 5G would not only materially delay the benefits of 5G for the American people, it would forever reduce the economic and societal gains that come from leading the world in technology.”

5G-CURRENT AFFAIRS-CHINA-TRUMP-HUAWEI:

Although US has a great reputation for its mobile technologies, Asia is dominantly leading the way regarding 5G. Four of the world’s five most 5G advanced nations are China, South Korea, Japan, and India.

However, no one can tell with certainty who will win the 5G race. A 2018 Cellular Telecommunications Industry Association (CTIA) report claimed that US was in third place in the 5G race, behind China and South Korea, while a 2019 CTIA report claimed that U.S. now shares the number one spot with China. Other reports put China as the clear winner, with functional 5G technology by 2020, while they claim that the U.S. is 5 years behind. AT&T Chief Executive Officer Randall Stephenson declared in March 2019 that China isn’t beating the United States on 5G – but then again, AT&T deceptively branded their new 5G E network pretending it uses 5G technology, when it used the regular 4G technology.

While these reports do not provide any clarity, these investments will. Starting in 2015, China has doubled down on investments in 5G technology, and has outspent the US by $24 billion to construct 350,000 new, 5G-compatible cell towers. During the same time, the US has built only 30,000 towers.

The reason China has prioritized development of 5G is because they understand that the race for 5G is a race for world-wide control. Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, explained that China’s goal is to become the global innovation leader, and will do everything in its power to achieve this goal, legally or illegally.

One of the most important weapons for China to win the 5G race is the Chinese company Huawei. Currently, Huawei is spending a tremendous amount of resources on R&D (almost 40% of their workforce), most of which is dedicated to 5G. This is more than Microsoft, Intel or Apple’s R&D efforts.

In addition to superior dedicated resources, Huawei has a long negative history of operating outside the international law and order. Huawei currently faces bans in Japan, Australia, New Zealand and the U.S. over fears that China’s government could use its systems to spy on their countries. The CIA, FBI and NSA publicly warned against Huawei. The Pentagon banned Huawei and its products. Huawei has long been accused of espionage, and for doing illegal business with Iran. Most recently, Canada helped the U.S. arrest Huawei’s CFO Meng Wanzhou, and President Trump signed an executive order banning any US company from doing business with Huawei.

It is extremely important that President Trump, the U.S. and its allies stop or slow down Huawei’s influence and operational capabilities throughout the world. As stated earlier, winning the 5G race will allow the development of exponential technology and booming economic growth for those who employ this technology first.

CONCLUSION:

If Huawei and China win the 5G race, they will undoubtedly use this technology to win over allies and dominate the world for a long time to come. They will offer this technology to other countries in exchange for trade deals, military partnerships, and economic prosperity. They could also choose to offer this technology to all US enemies, except for the U.S., leaving our country unable to compete. Thus, it is of the utmost importance that the United States wins the race to 5G.

President Trump must continue to put pressure of China and Huawei, in an intelligent way. There is no easy answer to do so, especially with the US and China locked in a tariffs war. All trade talks between the two countries will definitely include Huawei as a bargaining chip.

The Trump administration, US industry and government leaders, and allies must work in concert to win this race, by any means necessary, and make sure that all (or most) other countries will receive the 5G technology from the US, rather than from China.

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The Unprecedented Wealth Creation Opportunity of the Cannabis Industry is just getting started

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Cannabis prohibition is going to end much faster than most people anticipated, and this will allow for the biggest wealth creation opportunities in many lifetimes. When Prohibition ends, the dam holding back the Cannabis industry will have broken, and Cannabis will become ubiquitous in virtually every aspect of our society, worldwide.

Cannabis is extremely close being federally legal in the United States. 36 states have already decriminalized Cannabis, 11 of which have fully legalized it for medicinal and recreational purposes. In March of 2019, the House Financial Services Committee approved the SAFE Banking Act by 45-15. Earlier this month, 38 Attorney Generals from 38 U.S. states and territories signed a letter asking our Congress to pass legislation to increase Cannabis businesses’ access to banks, through the SAFE Banking Act.

Days earlier, the Treasurers of 17 states issued a separate call in support of the same bill. US Attorney General Barr stated he would not use federal resources to prosecute Cannabis businesses in states where it is legal. US Treasury Secretary Mnuchin urged Congress to pass the SAFE Banking Act. And finally, most Congressmen on both sides of the aisle are in favor of this Act passing through.

Cannabis products will disrupt multiple billion industries in the US, with the biggest changes taking place in medicine, pharmaceuticals, veterinary products, wellness and beauty, sleeping aids, packaging, banking, agriculture, advertising, food, alcohol, non-alcoholic beverages, tobacco, law, textiles and fashion/clothing, plastics, biodiesel and energy, paper, construction, sports products, tourism, and many more.

Most giants in each of these industries will inevitably become involved with Cannabis and adopt it within their existing offerings, as well as creating new Cannabis-based products and services. Food and soft-drink conglomerates like Nestle and Coca-Cola will create Cannabis-infused food, deserts and soft-drinks. Alcoholic beverage companies like Anheuser-Busch and Heineken will create Cannabis-infused alcoholic beverages. Textile companies like Admiral Sportswear, Nike, and Cone Mills Corporation will create hemp-derived shoes and clothing, and on and on. Thus, the companies that are currently establishing their footprint/territory and the technology of this industry will be prime acquisition targets for these giant corporations.

In addition to disrupting these existing industries, Cannabis will also create many new industries through new health and wellness products that combine CBD and THC substances. Cannabis and CBD are more commonly being used together in the creation a new worldwide health and wellness industry with a wide variety of plant-based consumer products.

Cannabis and hemp will become ubiquitous in our world. Almost everything in our lives as we know it will have a much improved, more durable, healthier version that is created with Hemp, Cannabis and its derivatives. There will be new infrastructure, new products, new healthcare (physical and psychological) treatment, new recreational activities, new foods, new productivity, new employment, new taxes and most important of all, a new life and culture.

Needless to say, the end of Cannabis prohibition will bring forth a political, economical, social and healthcare revolution in our world. We are entering an exciting new era, where Cannabis and hemp-based CBD are rapidly becoming an important part of an active healthier lifestyle. Patients will use medical Cannabis and receive much needed relief without the fear of going to prison for it. Adults can choose Cannabis for adult relaxation for a fraction of the cost and fewer of the negative effects of alcohol. Millions of people will sleep better and have less pain, children will be able to control their seizures and veterans will manage their PTSD.

This will create a new global health & wellness industry where hundreds of thousands are employed in an environmentally responsible new industry that produces a natural product, which is truly making the world a better and healthier place. New Frontier Data estimates that the legal Cannabis market in the United States will generate nearly 283,422 jobs by 2020. This will be more than the expected jobs created in all of manufacturing, utilities and government industries.

Such an unprecedented revolution to our world, will also bring unprecedented wealth creation opportunities. Just as most people underestimate the impact hemp and Cannabis will have on our real world, most investors underestimate the enormous investment opportunities this industry currently presents.

The most misunderstood element of this industry is the sheer scale of what the global Cannabis/CBD industry will be. What was projected to be a $25 billion global market is rapidly becoming $100 billion and could well go up to $1 Trillion over the next decade.

Grand View Research has published a study that shows Cannabis could become a $146 billion market (US and globally) by 2025. Based on a 20% profit margin and a 20x earnings valuation, the market cap of the global industry will be over $584 billion. In additional, there are approximately 180 Cannabis public companies in the US and Canada. If 100 of them become $1 billion dollar companies within the next decade, that could bring the total global Cannabis market cap to $1 trillion. From an investment prospective few new industries in history have offered the investment potential Cannabis offers in 2019.

Conclusion:

The Cannabis/CBD industry is entering a rapidly expansion cycle and the current market estimates are much too conservative. Cannabis prohibition will undoubtedly end, sooner rather than later. The myriad of recent positive developments in public policy suggests this will happen very shortly. Our politicians and Congressmen have the chance to create history, by bringing a long overdue end of Cannabis and hemp prohibition. They must vote to pass the SAFE Banking Act.

Investors realize the unprecedented opportunities for wealth creation in this industry, which is just getting started. This is an exceptional time to invest in the Cannabis market, as it seems to poised for a decade of remarkable domestic and international growth. Post prohibition, the Cannabis and hemp industry will go from today’s size of $10B, to the point where it will be absolutely ubiquitous throughout our society, products and markets – this exceptionally rapid development will create exceptionally large opportunities for Cannabis entrepreneurs and investors.

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