Something unprecedented will occur in the coming decades: a large, low-birthrate population in the industrialized world will steadily contract, while the largest “youth generation” in history will take its place.[i] One person in five in the world today is between the ages of 10 and 19.[ii] Most are being born in the developing world. Of countries experiencing rapidly growing populations, only one—the United States—is located in the developed world. Old people tend to have savings; the young have energy. Capital naturally flows from old to the young. Global savings, therefore, should want to reach the US with its relatively young and energetic population. The population and gross domestic product of the United States will expand steadily through 2050; the influence of the US among developed nations should rise.[iii]
America has been the frontier for productivity and improvements to standards of living since the 19th century. America is where savings have been best lent to create new, productive enterprises. In the wake of the First Industrial Revolution, between 1800 and 1900, inventions such as steam engines, mechanical textile looms, and railroads doubled US productivity. A Second Industrial Revolution brought about the invention of the electric light, telephone, phonograph, motion pictures and television; indoor plumbing, air conditioning and consumer appliances; the internal combustion engine. Productivity and per-capital gross domestic product (GDP) doubled again between the 1920s and 1950s. A third revolution from the late 1950s to about 1990, owing to computers and the internet, has doubled once more the US standard of living.[iv]
The US public stock market can serve as a proxy to illustrate the impact of invention on GDP: The market traded in a range from 1820 to 1870, and then doubled in value from 1871 to 1906—investment in technologies from the First Industrial Revolution paid off while America transitioned from an agrarian to an industrial nation following the Civil War. From 1907 to 1920, stocks declined as the late-1800s investment bubble burst. However, from December 1924 to October 1929, capital again poured into the market, sending the values of new companies that sold electrical equipment, entertainment, communications, and automobiles to eventual extremes.[v] Firms with now-familiar names, such as Radio Corporation of America, Ford Motor Company, and General Electric—which had been start-ups during the downturn of the early 1900s—replaced railroad, agricultural, and steel trusts as major contributors to American GDP.
The later stage of the Second Industrial Revolution capitalized on inventions that helped win the Second World War, including plastics, miniaturized electronics, and pharmaceuticals. Speculation grew, and in 1966 the market peaked, creating opportunities for upstart Third Industrial Revolution companies such as Microsoft, Apple, Oracle, and a number of “dot-coms” to take over market leadership.
The American economy has been transformed in the past; it is being transformed again.
Since the mid-1800s, the demand for American technology and American products has appeared almost limitless. The result has been that with successive “industrial revolutions,” America’s share of the global economy has grown from about seven percent in 1850 to close to 20 percent today. Despite competition, the US has maintained a lead in every field of technology: software, telecommunications, aerospace, biotechnology, and energy production.[vi] Today, discoveries involving genetics and biotechnology, computation, nanoengineering, and materials science are the “next wave” of innovation—technologies that, as in past revolutions, will create a multiplier for industrial productivity. Invention in these fields will happen where there is a richness of human and financial capital. While there is a race to innovate going on in Asia, Europe, and America, much of the important research and commercialization of “Fourth Industrial Revolution” technologies is happening in the US. [vii]
The Angel Capital Group is seeking Fourth Industrial Revolution technology, Advanced Materials, as a key area of focus for deal flow. A definition of “materials” typically includes metals, polymers, ceramics, glasses, and composites; advanced materials are entirely new materials or are modifications to existing materials that are early in their product or technology lifecycle. Advanced materials differ in characteristics such as high strength, light weight, fire and chemical resistance, or thermal and electrical conductivity. Advanced material subsectors with excellent near- and intermediate-term potential are: electronic materials, medical materials, nanomaterials, reprocessing of waste materials, and superconductivity. [viii] The total market estimate for advanced materials in 2015 was $169 billion; however, the market is expected to reach $1.2 trillion by 2050.[ix]
Absent a catastrophe—collision with an asteroid or a world-wide pandemic—continued global population growth until 2050 is almost inevitable. Population projections are not merely speculative: Every demographer agrees that the trends in place now will continue. Some expect that developing “BRIIC” countries—Brazil, Russia, India, Indonesia, and China—will define the world’s new economic center of gravity. BRIICs are expected to account for 40 percent of the global population in less than a decade. But Russia, which in 2000 ranked sixth in terms of population, is rapidly shrinking. China, also, is aging faster than the US. By 2050, the lack of births in China will usher in an era of labor shortages; China will be overtaken by India as the world’s most populous nation. Brazil, Indonesia, Pakistan, Nigeria, and Bangladesh will round out the list of the world’s largest countries—along with the US. Again, there are two ways to grow an economy: bring capital to young people, or else bring young people to where there is capital. Financial and human or intellectual capital always concentrates where it is best rewarded and can be applied to its greatest effect. Despite massive populations in the BRIICs, there is also a profound disparity of income and lack of opportunity in those places. Due to high fertility and immigration, along with great financial, legal, and technological capacity, America will stay an expanding nation, and is likely to remain the prime destination for both financial and skilled human capital.[x]
As markets in the developing world increase commensurate with population growth, the US as a producer of Fourth Industrial Revolution technology is likely to find itself geographically separated from too many of its potential customers. Fourth Industrial Revolution manufactures from the US will require energy-efficient, fast-moving carriers to access customers as far away as Asia. The case for seeking advanced materials deal flow is compelling, in part because no other area of technology offers as many possible solutions to questions of reduced weight, improved strength, and greater efficiency, as do advanced materials. This future trillion-dollar advanced materials sector could be key to opening the world to American exports, and restructuring the US economy to supply the world’s appetite for improved homes, water systems, energy plants, communications, transportation systems. Advanced materials are an enabler of new, innovative technologies that promise to propel living standards ever-higher in the years ahead. The evolution of Additive Manufacturing has the potential to radically shift the manufacturing landscape in the future. Advanced nanomaterials such as graphene and other 2-D and 3-D materials will play a vital role in rise of Additive Manufacturing in the 21st Century.
At the start of the 21st century—at the start of a Fourth Industrial Revolution—America has the means to create and commercialize innovations in the world’s largest and fastest growing markets. We are committed to making this happen.
[i] United Nations, Department of Economic and Social Affairs, Population Division
(2015). World Population Prospects: The 2015 Revision, Key Findings and Advance
Tables. Working Paper No. ESA/P/WP.241.
[ii] Center for Strategic and International Studies (2006). 7R Revolutions. Retrieved from http://www.7revs.csis.org.
[iii] Center for Strategic and International Studies (2008). The Graying of the Great Powers: Demography and
Geopolitics in the 21st Century, Major Findings of the Report.
[iv] Gordon, R. J., Center for Economic Policy Research (2012). Policy Insight No. 63: Is US Economic Growth Over?
Faltering Innovation Confronts the Six Headwinds.
[v] Bank of America Merrill Lynch (2012), Global Strategy: The Longest Pictures, Research Report. Retrieved from
[vi] Brenner, R., Goldman, D.P. (2009). First Things: The Needle’s Eye. Retrieved from http://www.firstthings.com/
[viii] Rennselaer Lally School of Management and Technology (2004). Advanced Materials Sector Report: Technology
[ix] European Commission, Directorate-General for Research and Innovation, Industrial Technologies (2012).
Technology and Market Perspective for Future Value Added Materials. Final Report from Oxford Research AS.
[x] Jackson, R., Center for Strategic and International Studies (2002). The Global Retirement Crisis: The Threat to
World Stability and What to Do About It.
Copyright Angel Capital Group, 2016