About three years ago I had just finished up an undergraduate degree in chemistry, and after that I spent about a year working in the research and development area of material science, specifically in the nonwoven industry. After that short period of time of working in that particular space, I found an inspiration to apply to law school, and I recently finished my first year.

Throughout my life I’ve always enjoyed writing, and currently I’ve found myself with an interest in how science intersects in a business sense. I wanted to write about something current happening in the nonwoven industry, and through my search I came across Tidal Vision, a private chitosan producing company founded in 2015.

What caught my attention initially was that they were pulling investor interest. Tidal Vision operates through a vertical integration strategy that, as of 2026, is unique to the chitosan producing market, meaning they control both the extraction and formulation of chitosan rather than relying on third parties for either step.

In February 2025, Tidal Vision closed a $140M Series B financing round, backed by investors including Cambridge Companies SPG, Eni Next, and Milliken & Company. CEO Craig Kasberg said the company had “already demonstrated it’s possible to make our biomolecular solutions outcompete.”

For those who don’t know, Chitosan is a biopolymer formed from the shell of crustaceans, used in the pharmaceutical, medical, cosmetics, and biotech industries. The method of deriving chitosan from chitin, consisting of deacetylation and reduced temperatures, was patented in 1980 by Quintin P. Peniston and Edwin L. Johnson. This patent has since expired, which highlights the shift in the market toward finding novelty beyond the initial derivation and pushing companies into specialized products or bulk production.

Tidal Vision formulates specialized products but goes beyond that. The company also controls both the extraction and formulation of the chitosan product by way of vertical integration. Vertical integration involves a company taking control over at least two steps in the value chain to streamline the operational process, increasing market share and potential buying power while aiming to limit inefficiencies. There are potentials to achieve higher profit margins, however, a drawback is the high initial cost required, which could prevent or delay a profitable integration. Tidal Vision is cited as the only vertically integrated chitosan producer in the world, a feature that may have added lure to past funding and promoted growth.

In addition to vertical integration, they pursue a strategy of creating a lower cost biopolymer solution compared to the synthetic chemicals it aims to displace. This is part of the company’s three-layered business strategy, described as an environmentally friendly way to extract chitosan from the seafood industry. The CEO has noted that the main industry competition comes from displacing these non-biodegradable chemicals. In a 2022 New York Rural Water Association article, the CEO further describes this green chemistry method, which allows non-hazardous byproducts to be recycled and turned into fertilizer. This brings a wide range of chitosan molecular weights, leading to higher efficacy in water treatment at half the cost. This lower cost is precisely what allows the chemical displacement to occur.

Furthermore, Tidal Vision focuses on specialty products that are application specific, rather than low-cost bulk-produced commodity chitosan, prompting high margins and industrial chemical displacement. This specialty product market may align with the company’s budding IP strategy. Tidal Vision holds, as of 2026, five total patent documents, with three currently pending. One thing to note: two of the patent documents, although filed on May 8, 2023, are labeled as inactive. Being labeled inactive could be a potential drawback, as the patents can no longer be enforced, though the three pending still signal future proprietary development of specialty products.

Given that Tidal Vision is one company of many in the broader market, it’s worth looking at the chitosan market as a whole. As of 2026, the chitosan market is estimated at $6.30 billion, projected to grow to $11.30 billion by 2031 at a CAGR of 12.38%. This represents a 0.29% decline from the broader 2026 biotech CAGR of 12.67%. However, the growing need for environmental compliance and high margin specialty products could further contribute to growth in future years.

The market spans many industries. In the food industry, chitosan derivatives can reduce fasting glucose and serve as a prebiotic supplement. Industrial chitosan use has expanded to address residue caps, prompting pulp and paper mills to trial chitosan alternatives to other chemicals. Chitosan derivatives are also able to remove heavy metals, aiding water treatment regulation. The pharmaceutical sector is utilizing chitosan nanoparticles for drug delivery innovation, and textile applications include military hemostatic dressings. By contrast, Tidal Vision focuses on serving mainly the textile, water treatment, and agriculture industries.

Looking at companies that make up the market, Primex ehf and G.T.C Bio Corporation are listed as two of the five chitosan industry leaders. Primex, located in Iceland, uses wild shrimp shells to bulk produce and deliver products to industries such as cosmetics, biomedical, food, and agriculture, acting as a bulk biomaterials supplier with medical-grade, high-purity offerings. G.T.C. Bio Corporation is located in Shandong Province, China, and manufactures chitosan and chitosan derivatives across agriculture, chemicals, health and medicine, and more, including various derivative types like chitosan oligosaccharide and chitosan lactate. This suggests a model built around bulk produced chitosan derivatives.

Because these companies are private, there are no public financial statements or regulatory filings, such as EBITDA disclosures; this analysis relies on business structure and third-party market reports.

Geographically, the chitosan market landscape is complex, with multiple regions competing in different segments. Europe is cited as the fastest growing market, with a CAGR of 14.51%, attributed to wastewater mandates, trauma centers standardizing chitosan dressings, and Germany funding municipal trials, among other factors. North America, capturing 25.13% of the chitosan market in 2025, is the largest market, driven by low contaminant shells, attractive pharmaceutical prospects, and early battlefield use of chitosan hemostats. The Asia-Pacific region, however, holds 68% of global volume share, producing chitosan for fertilizer, cosmetics, pharmaceuticals, and more.

Even though these companies are cited as industry leaders across a vast set of markets, Tidal Vision is nonetheless gaining leverage of its own through its focus on specialty, application-specific products rather than low-cost bulk commodity chitosan. This could give way to a broad range of growth, including possible international expansion.

Tidal Vision is carving out its own lane with application-specific formulations that can substitute for existing industrial chemicals. They are more than a bulk chitosan producer; it is a vertically integrated, IP-driven specialty chemicals business operating in a diverse set of industries. The company exhibits clear signals of momentum in the chitosan industry, and time will tell if that growth holds.

Disclaimer

The content published in Nummus is for informational and educational purposes only and does not constitute financial, investment, legal, or professional advice. The views expressed in this article are those of the author and do not represent the views of Nummus or its editors. Readers should not rely on any content published in Nummus as a basis for making financial or investment decisions and are encouraged to consult a qualified financial advisor before doing so.

According to Merriam-Webster, marketing is defined as “the process or technique of promoting, selling, and distributing a product or service.” Just as the times change, trends also change. In the ever-shifting world of marketing, with AI becoming a great equalizer for products, the playbook has changed yet again and highlighted one specific aspect of selling: the community. At Boston University, my field of study—marketing—covers this change. With any product, regardless of what it is, the main question is: how do I get the customer to want this?

Humans are naturally inclined to seek belonging in the confines of a group. For our ancestors, to be outcast meant losing access to protection and resources—conditions which could prove fatal. Social exclusion no longer carries the same consequences for people but the instinct to belong is ingrained within us. Today, that instinct is often leveraged to market identities and lifestyles by appealing to our enduring desire for acceptance.

For decades, consumer choice was largely governed by usefulness: which product worked better, lasted longer, or cost less. A motorcycle was simply a way to get from one place to another; a phone was a tool for communication and running shoes were made to improve athletic performance. As the economy has expanded and markets have become more crowded, products have become easier to replicate, and utility alone is not enough to create lasting loyalty. The most successful companies have learned to sell something more desired alongside their products: a feeling, or an identity. Harley-Davidson sells the image of freedom and rebellion. Apple sells innovation and status. Nike sells achievement and empowerment. In each case, the product may originally bring a customer in, but the identity surrounding it gives them a reason to stay. The brands that create lasting loyalty are often the ones that make consumers feel that buying from them means joining something larger than the product itself.

The Timeline

To uncover how the strategy of community building became so successful, we need to understand why there was a marketing shift from products to identity. Before World War I, thrift was more culturally valued than consumption, and the idea of “the consumer” was not yet a central part of American culture. That changed in the 1920s, when U.S. companies could produce a larger amount of goods, more than what people needed. Instead of simply supplying existing demand, businesses now had to convince people to want more. Edward Bernays openly defended this approach in his writing on advertising and public desire. Charles Kettering captured the new mindset in 1929 with his article and phrase, “Keep the Consumer Dissatisfied.”

After World War II, television gave advertisers a much stronger way to sell their products through images, stories, and emotion rather than straightforward product claims. Brands were able to connect with their audience in a more personal way. As television became widespread in the 1950s, advertising began moving away from the common “unique selling point” model and began moving towards campaigns built around recognizable brand identity.

At the same time, companies increasingly took products which were once associated with upper-class life and marketed them to ordinary consumers as attainable status symbols. Buying became a way to feel socially elevated, not just a way to meet practical needs. Inspired by his uncle Sigmund Freud, Bernays wrote in his book “Propaganda,” that people had begun desiring items not because of their “intrinsic worth or usefulness” but because they were “an evidence of his success.” This shift made consumer goods a form of social signaling. Products could now communicate wealth, success, or belonging without the buyer ever having to say it directly.

By the 1960s, advertisers were targeting young people’s values and attitudes. This audience was “Come alive! You’re in the Pepsi Generation!” color advertisement, January 1965. Courtesy of the Smithsonian’s National Museum of American History. forming their own unique culture and ideas. They also had money to spend and were able to influence their parents’ spending habits. With this, advertisers became more creative. The Pepsi Generation campaign is a prime example of how brands were less focused on selling their products, and more on creating a lifestyle. Other brands soon followed suit such as Campbell Soup and Volkswagen.

Once companies realized identity and status could be as persuasive as usefulness, branding became less about explaining what a product does and more about showing what owning it says about you.

Psychological Aspects

Lifestyle branding works because consumers are not always choosing products only for their function. Instead, they are often drawn to brands that reflect their identity, or who they want to be. Emotional marketers utilize three social ideas to connect their consumer with their product. The first is identity, which influences individuals to buy things that align with who they are, or who they want to be. Nostalgia uses preexisting emotional ties to make a brand unforgettable. Lastly, social proof makes the individual feel like the purchase of a product is an entry point into a larger group. That impulse becomes more powerful when a brand starts to feel like a group rather than a company. Social identity theory argues that people build part of their self-image through the groups they believe they belong to. In that sense, being an “Apple person,” or a “Nike person,” can become more than just a buying preference. It can instead become a small part of how someone views themselves. People also tend to compare their own group favorably with rival groups, which explains why certain brand users might isolate themselves from the other brand users. This can create a sense of belonging or community.

The psychologist Russell Belk described this as the “extended self.” This concept, which combines anthropology, psychology, and sociology, explain the idea that possessions can become extensions of identity rather than objects separate from it. An item may serve a practical purpose, but it can also help someone express the image they want to project. A person who buys Lululemon may want to be seen as athletic, while someone who buys from Trader Joe’s may want to appear healthy. In this way, the product becomes meaningful because of what it seems to say about its owner. Brands did not create the human desire to express identity through possessions, but through connecting ideal values and lifestyles to certain items, they have become extremely effective at utilizing this aspect of human behavior. The result is that some companies are not competing to sell better products. Instead, they are competing to offer customers a more compelling version of themselves.

Legacy Brands Strategies

Two quintessential examples of companies who have utilized this type of marketing are Harley-Davidson and Apple. Harley-Davidson’s appeal extends well beyond the motorcycle itself. The company has long tied its brand to freedom, independence, adventure and rebellion. These values make riding feel like a lifestyle rather than a form of transportation. For customers, owning a Harley can signal that they identify with more of a risk-taking version of themselves. But the brand’s most effective move was not just attaching those ideas to advertisements; it was giving riders a community where identities could be shared with other people.

This became especially important to Harley’s business turnaround. In 1983, the company was near extinction. By 2008, it had become a top 50 global brand which was valued at $7.8 billion. Harvard Business Review links part of that recovery due to Harley’s decision to build a brand community around the activities and lifestyle of riding. Rather than treating customer culture as an extra marketing benefit, the brand put focus on community building. This community created the Harley Owners Group or H.O.G. With more than 1,400 official chapters worldwide, H.O.G. gives members recurring reasons to interact with both the company and one another. There are rides, rallies, charity events, local meetups, etc. This matters because it makes Harley an active part of a rider’s social life, not just their purchase history.

That deeper relationship also has a direct business value. The company remains connected to their customers through the gear they wear, maintenance they need, and what bike they may choose to buy next. In a 2024 interview, a H.O.G. representative said members ride twice as often and spend 30% more than non-members. These figures are presented as Harley’s own estimate. Members also become informal advocates, introducing friends to the brand and offering feedback to improve the overall riding experience. Harley’s community therefore creates more than just loyalty. Customers spend more, promote the brand voluntarily and choose to willingly identify themselves with the brand’s values.

Apple uses a similar approach to Harley-Davidson’s. It shows how lifestyle branding can make loyalty profitable by turning individual products into an ecosystem that customers commit to. The company has built its image around innovation, simplicity and status. An Apple product can signal that its owner is modern and technologically fluent, not just someone who needed a new phone or laptop. That identity matters because Apple makes its products feel like entry points into a preexisting world rather than isolated purchases.

For many customers buying an iPhone, AirPods, Apple Watches, and MacBooks are not viewed as separate purchases. Instead, they are parts of one connected source that is designed to work together smoothly. This helps to explain Apple’s unusually strong customer retention. iPhone retention is reported to be 92%, while roughly 79% of iOS users remain in Apple’s ecosystem instead of switching to Android. The more products a customer adds, the more convenient the ecosystem becomes. At the same time, the choice to start over with a different brand becomes less appealing.

The ownership data shows how this ecosystem creates opportunities far beyond the initial phone sale. Among iPhone users who own a wearable device, 81% own an Apple Watch, compared to 24% of non-iPhone users. The same pattern appears with iPads and AirPods: 69% of iPhone users own an iPad and 60% own AirPods, compared to non-iPhone users who own these products at much lower percentages (21% of non-iPhone users own an iPad, and 13% of non-iPhone users own AirPods). These numbers depict a clear pattern and connection between all of Apple’s products.

This loyalty to the ecosystem allows Apple to make riskier decisions, while trusting that their consumers will stay loyal. One example came in September 2016, when Apple announced that the wired headphone jack would be removed from the iPhone. This decision initially frustrated many users, since it made their existing headphones less convenient to use. But it also created an opening for Apple to introduce AirPods, which were released in December of 2016. These quickly became one of Apple’s bestselling products in a short span of time. One might think that people would have just switched to a different brand, but that would mean users would give up more than one feature. It could mean replacing a phone, watch, computer, etc. In that sense, the headphone jack decision proved that Apple could turn a potentially unpopular product change into another opportunity for cross-selling, all because of the brand loyalty they had created.

This is the unique business advantage behind Apple’s lifestyle branding. Apple is not relying on one-time sales. It builds a customer relationship where each purchase reinforces both the practical value of the ecosystem and the customer’s attachment to the brand’s identity. The result is repeated buying and customers who are less likely to switch to another company because of a lower price. In Apple’s case, belonging to the brand is not just emotional; it is reinforced every time its devices work together.

New Brands Doing Community Right

Kiel James Patrick, a growing competitor to companies like Ralph Lauren and Brooks Brothers, doesn’t merely sell sweaters, dresses, shirts, jewelry and hats. They sell a romanticized version of New England. They evoke an emotion, a nostalgia, of autumn foliage, coastal Rhode Island, sailing, golden retrievers, and classic Americana. Even those who never purchase a clothing item engage with their world because it represents something that lies beyond the clothing. Customers see on their social media, a story of a life that they long for.

Your physical appearance is a form of initial communication with people that you meet. It indicates personal values, aspirations, personality and taste. Clothing is a social language expressed without any words being relayed. Thus, clothing companies are not only racing to make the best piece of clothing using the finest fabrics. With every aspect of their customer facing retail, from the way their store is decorated to the models they use and designs on their social media, they are projecting a certain message. With something that is like a second skin, what the pieces represent is as much of the clothing as the fibers used to make them.

Ffern, a British fragrance company founded in 2017, didn’t make community a part of their distribution plan. They made community marketing their central distribution network. They don’t have a large fragrance catalog and celebrity endorsements. They focus on building a mystique around their product doing 4 releases a year in accordance with the 4 seasons. They are extremely exclusive products due to the fact that they are made in small batches and never produced again. Rather than allowing anyone to purchase a bottle at any time, the company operates through an invitation-based waiting list known as The Ledger, where prospective customers wait for the opportunity to receive the next seasonal fragrance. Their brand delivers a message of craftsmanship, detail, and true beauty through their abstract, cinematic advertisements. The feeling of limited access taps into the fear of missing out. Combined they have a formula that is working. Each season it seems like more people want to purchase Ffern fragrances.

The Value of Loyalty

Emotional loyalty is valuable because it changes how customers behave long after the first purchase. According to Harvard Business Review, emotionally connected customers can be worth more than twice as much over their lifetime as customers who are simply satisfied. They tend to buy more, recommend the company more often, and become less sensitive to price. For companies, this means that the goal is not just to prevent customers from leaving, but it is to create a relationship strong enough that customers continue choosing the brand even when a competitor offers a more convenient alternative.

McKinsey estimates that replacing one lost customer can require acquiring three new ones, making retention far more valuable than companies sometimes treat it. Its research also found that customer experience leaders generated double the revenue growth of lagging companies between 2016 and 2021, partly because much of a company’s value comes from increasing revenue from customers it already has. That loyalty can have a major impact on growth. The Journal of Small Business Strategy estimates that returning users generate a massive 60% of total revenue despite making up less than a quarter of traffic, making retention far more valuable than companies sometimes treat it. Repeat visitors showed a conversion rate over four times higher than brand-new users, partly because much of a company’s value comes from increasing revenue from customers it already has. The strongest brands take this a step further by turning loyal customers into a source of new business. A Journal of Marketing Research study tracking a large-scale consumer field dataset found that referred customers went on to make between 31% and 57% more downstream referrals than those acquired through traditional channels. This research demonstrates how this business model can be extremely valuable.

The Future of Marketing

Marketing is now being completely reshaped by artificial intelligence. Companies can use AI to analyze customer behavior, create tailored product suggestions, and efficiently make different versions of a message for smaller groups at a large scale that wasn’t once humanly possible. McKinsey argues that AI can help brands create more relevant offers and messages for “microcommunities,” instead of relying on general and broad promotions. This may make community-based marketing even more effective because companies can communicate with their different types of customers in ways that feel more personalized and connected to their interests.

However, AI also makes it easier for companies to produce large amounts of generic content. HubSpot’s 2026 State of Marketing report describes AI as becoming a baseline tool rather than an actual competitive advantage, while trust, a clear brand point of view, and human insight are what still help companies stand out. In the future, successful marketers will likely use AI to respond and personalize messages more quickly, but the formation of real communities will still depend on an authentic brand experience. Technology can make a message feel more personal, but it cannot create a true feeling of belonging if the company has nothing meaningful to offer its customers.

Conclusion

We live in a time where making a good product does not guarantee success. Day by day markets become increasingly saturated, and competitors can replicate products more quickly than ever. New companies who hope to build out a niche must find new ways to differentiate themselves.

Rather than competing solely on price or quality, something which often pressures businesses to sacrifice margins or lower standards, companies can create value through something far more difficult to imitate: a sense of belonging. That feeling, though existing exclusively in the mind of the consumer, still has a tangible effect. Emotional connection increases customer loyalty, raises lifetime value, encourages repeat purchases, and inspires customers, unprompted, to advocate for a brand.

New products and services will continue to enter the market, and consumers will always have alternatives. They are not permanently loyal to the largest or oldest companies. They are loyal to the brands they think represent and understand them. Something connected to an identity larger than themselves. A persuasive product attracts a first purchase, but what remains draws them after that? It’s the compelling character and a genuine group that keep customers returning. Switching products is easy. Switching communities is not.

Disclaimer

The content published in Nummus is for informational and educational purposes only and does not constitute financial, investment, legal, or professional advice. The views expressed in this article are those of the author and do not represent the views of Nummus or its editors. Readers should not rely on any content published in Nummus as a basis for making financial or investment decisions and are encouraged to consult a qualified financial advisor before doing so.

Between TikTok doom scrolls and alarmist op-eds, the message to college students has been relentless. A college degree isn’t worth it. AI is wiping out entry-level jobs. Graduates are walking into a bleak future.

I work with undergraduate business students every day, and their anxiety is real. They’re making a significant financial investment in their futures while hearing this steady stream of headlines questioning whether that investment still makes sense. But there is another side of the story, and it’s one business students deserve to hear more often than they do now.

A Business Degree Still Delivers

The fundamentals of a business degree remain remarkably strong. At age 25, college-educated workers earn 27% more than peers without a degree. By age 55, that premium grows to 60%. For finance majors specifically, the Education Data Initiative reports a lifetime ROI exceeding 1,500% for a bachelor’s degree in finance.

The near-term labor market offers encouraging signs as well. The National Association of Colleges and Employers projects a 5.6% increase in hiring for the Class of 2026. Finance, accounting, and business administration remain among the most in-demand fields. Salaries for business graduates are also expected to rise, with particularly strong gains in marketing, business administration, and sales.

Salary projections and hiring forecasts address only part of students’ concerns. The larger question is whether these opportunities will still exist as AI becomes embedded throughout the economy. The evidence is more encouraging than many students realize.

What the Doomsday AI Headlines Miss

Not everyone shares the prevailing narrative that AI will eliminate large numbers of professional jobs, and some of these alternative voices are among the most credible in finance and business. David Solomon, CEO of Goldman Sachs, wrote in The New York Times that predictions of an “AI-driven job apocalypse” are exaggerated. As technology makes work more efficient, organizations often respond by taking on more complex challenges rather than by reducing staffing. Andy Kessler made a similar case in The Wall Street Journal, drawing on economist Joseph Schumpeter’s concept of creative destruction. Productivity gains historically create new opportunities even as they transform existing work. Their argument is that AI may reshape work, but history suggests that productivity gains are more likely to redefine jobs than eliminate them altogether.

Recent employer data also supports that view. A May 2026 Strada Education Foundation survey of 1,500 employers found that companies adopting AI were far more likely to increase junior-level hiring than to reduce it. More than 40% reported that AI was increasing the complexity and analytical demands of entry-level roles. Employers consistently identified communication, critical thinking, and problem-solving as among the most valuable skills for new graduates. Major employers, including MetLife, IBM, and Accenture, are expanding entry-level and early career hiring in 2026. The tech sector posted over 270,000 new job listings in April alone, the highest level in three years, with most of those positions requiring a college degree.

There is no doubt that AI changes the future of work. However, anyone can learn to prompt in an afternoon. Four years of building and applying business fundamentals, such as how to communicate, lead, think critically, problem solve, and turn ambiguous information into sound decisions, are harder to replicate. The data show that employers recognize the difference and still reward the investment in an undergraduate business education. Students deserve to know that, too.

Disclaimer

The content published in Nummus is for informational and educational purposes only and does not constitute financial, investment, legal, or professional advice. The views expressed in this article are those of the author and do not represent the views of Nummus or its editors. Readers should not rely on any content published in Nummus as a basis for making financial or investment decisions and are encouraged to consult a qualified financial advisor before doing so.

While reading the book Globalization and Its Discontents by Joseph Stiglitz and discussing the state of political divisions with my peers, I found myself inspired to take a closer look into how America reached such a point of deep ideological cleavages pertaining to economics. Why do so many people vigorously clash over the President’s dogmatic economic policy?

It has been just over a year since President Donald Trump’s sweeping waves of tariffs, including the groundbreaking “Liberation Day,” and although the Trump administration has increased the United States’ military and political presence globally since then, he has not changed his rhetoric regarding his economic policy. Instead, Trump favors a protectionist agenda, joining the movement against globalized, free-market economies.

This position is not an isolated one; rather, it is just one step within a larger global movement favoring protectionism. On an international level, political changes often come in waves, and many Western countries are currently a part of a wave to change the way they navigate through the globalized international economy - notably England with its Brexit plan and French political movements under the leadership of Marine Le Pen.

Many constituents in these countries believe that the free market approach their country has adopted is sub-optimal at this time, leaving out key demographics from the economic prosperity that globalization has promised for so long.

So why is the United States, the most economically rich and powerful country in the world, sharing this same sentiment? Albeit an entirely separate issue, why this administration, as well as past US administrations, has pursued protectionist policies is just as important of a topic to discuss.

Let us start with understanding the America First movement, one that is predicated on the idea that engaging with foreign nations is a waste of resources and leads the United States to be taken advantage of, whether it be from an economic, political, or military standpoint. Currently, a large portion of the country, often working blue-collar jobs, believes globalization has destroyed American industries. The reality is, in some ways, they are correct: globalization has overlooked many Americans from an economic standpoint. It falsely promised a mathematically proven way to increase the wealth of this country; however, it truly comes with nuanced tradeoffs, helping some and hurting others.

In America, people who work in a given factory, call it Factory A, compete against Factory B in terms of the price of goods, quantity, wages, and other outputs. This competition ensures that Factory A cannot impose unfairly low wages to cut costs, as workers will simply move to work at Factory B, keeping American workers and their prosperity secure. However, the problem with globalization is that Factory A is no longer competing with Factory B; in reality, they are both competing with Factory C, one that exists halfway across the world with minimal labor and wage regulation. This causes these jobs to be outsourced to countries that produce goods at a cheaper rate, cutting prices for consumers, yet leaving many Americans without work.

This issue becomes exacerbated by recent industry changes to promote environmental sustainability and slow the destruction of our planet, leaving even more workers in industries such as oil, coal, and mining looking for new work.

So while many benefit from lower costs and cheaper wages, we can see many in this country, particularly those who subscribe to the America First movement’s ideology, suffering from the effects of globalization. Unfortunately, they incorrectly identify the source of the issue, often blaming immigrants despite the extensive economic research that proves the impact of immigration to be grossly overestimated and, if anything, a benefit to the economy.

While globalization is marketed as a mathematically proven net-positive, in wealthy nations, it actually benefits those who were already rich while leaving many blue-collar workers behind. This is common knowledge among economists, and if the U.S. does choose to sign the social contract of living in a globalized economy, it needs to share the benefits and costs among its population in order to optimize the positive impact of globalization. Yet recent welfare cuts move policy in the opposite direction, arguably exacerbating the very problem that gave rise to the America First movement.

Understanding the support for anti-globalization movements among constituents only goes so far when analyzing policy. One must also study why policymakers pursue these agendas, and it is important to remain critical of the justifications politicians give for their policies, going beyond simple face-value interpretations.

If a politician believes that their proposed agenda is best for America for a given reason, they will heavily campaign to get it passed. If the optimal implementation strategy entails listing a different or incorrect justification for their policy because it will resonate more with American voters, then that is the most effective action they can take.

A famous example of this is President Bill Clinton’s PNTR deal with China in 2000, one that claimed to bring democracy to China through trade despite there being no evidence of a causal relationship between trade and regime type. Clinton, surrounded by top economists and foreign policy experts, likely knew this, yet listed the justification of bringing democracy to China, as it sounds appealing to Americans who are not knowledgeable about foreign policy. In hindsight, Clinton could have prevented a major conflict with this deal by establishing strong economic ties linking the United States and China, raising the costs of a war between the two.

With this in mind, although Trump has given reasons for why he pursued tariffs and a new age of protectionism, one can not take his words at face value. There could be many reasons why he believes in tariffs.

The primary justification he gave was disparities in bilateral trade relationships that resulted in the United States importing more than exporting to a foreign country. This notion that a negative bilateral trade balance by itself indicates a country is being “ripped off” is a view that most economists consider unrepresentative of the complexities of international trade.

In these circumstances, American businesses and consumers are choosing to pay a foreign country more than they pay the U.S. for goods and services. If this exchange were genuinely unfair to American interests, market forces would presumably lead consumers and firms to redirect that spending domestically or elsewhere. The dynamic resembles the relationship between a customer and a barber: the barber provides a valuable service that the customer pays for, but the customer is under no obligation to sell the barber a good or service in return, and no one would characterize this asymmetry as exploitative.

Another possible explanation for the tariffs results from the decline in American hegemony; however, it only serves to explain tariffs against China. Though it is debated whether we live in a unipolar or bipolar international system, it is accepted that each day we step closer and closer to a bipolar system, essentially meaning that China is catching up to create a second pole or global sphere of influence that can contend with the United States.

In political theory, a bipolar system causes the two poles to care deeply about the relative gains in power between the two countries. Furthermore, when one country in a bipolar system, the United States, is declining in power relative to the other, they rush the action, trying to bring about a decisive conflict before they are no longer able to contend with the other.

This was potentially the United States’ goal regarding tariffs on China. The US may be losing its advantage over China and is initiating conflict in hopes of limiting its power base before it is too late to challenge it. Although traditional economic thinking would cause a policymaker to stray away from the absolute losses that tariffs bring about, an international political economist would argue that tariffs can be necessary in an instance where relative gains are prevalent if the United States can hurt China more than it hurts itself.

At first glance, this looked like it was possible and is potentially the source of confidence for Trump in his numerous trade wars against China. The United States is China’s biggest importer at $525.65 billion worth of exports, almost twice as much as its next largest importer. This is an incredible advantage for the United States, as China is dependent on U.S. markets to sell its goods and services. Therefore, given China’s dependency, tariffs could hurt China more than they would hurt the United States.

Incidentally, the idea of Trump using the country’s imports as an advantage over China proves that he probably does not believe a negative trade balance is indicative of the United States being taken advantage of by other nations.

However, after taking a closer look, this advantage does not play in the United States’ favor as much as it appears to. The common narrative is that China has weak domestic markets and relies on its exports for income. However, China’s domestic markets have been growing rapidly, with consumer spending growing to $6.963 trillion in 2023, a 103.1% increase from 2013. In short, China has been growing its domestic markets extremely well, and it is still just scratching the surface. Therefore, a rise in export costs resulting from tariffs would only incentivize more domestic growth for China, having an unintended positive effect.

In the end, most experts agree that the United States ended in a weaker position as a result of the tariffs against China, and it earned the president the unflattering nickname TACO (Trump Always Chickens Out). The Trump administration’s expectations regarding how a trade war would go are unclear, but the aim of imposing costs on the Chinese economy, given the importance of relative gains, is a valid potential reason for why Trump favored protectionism at that moment.

A third theory also stems from the place the United States finds itself in regarding the international political economy. After the Second World War, the US built the liberal international economic order, instating a rules-based system centered around free and globally integrated markets. After years of success in the United States, as outlined earlier in this article, this global system has recently begun to harm the US in some ways, helping other nations like China more than it does the US. As a result, America has taken a step back from its unequivocal support of this globalized system, slowly creeping closer and closer to protectionism.

Under President Barack Obama, the United States started selectively blocking the appointment of judges to the Appellate Body, an integral part of the WTO that acts as a supreme court for global trade, due to unfavorable rulings. Under the Trump administration, the United States has blocked the appointment of all judges, and now, the court sits entirely dormant, with zero judges to hear cases.

Once the liberal international economic order, founded upon an institutionalized, rules-based framework, no longer behaves optimally for U.S. interests, it tears down the system, preventing any nation from thriving within the old regime. The same can be said for the Trump administration’s use of tariffs: if free markets help competitors like China more than the United States, then the free market system is perceived as flawed.

Since Obama’s presidency, each administration has asserted some degree of protectionism, even President Joseph Biden, who kept and expanded upon Trump’s tariffs from his first administration. These actions are a product of America’s declining economic power and its use of the rules-based economic order.

However, it remains to be seen if tearing down the system is the optimal way of fixing America’s problem. China and the EU do not need to wait for the United States to reshape the global order, but this time they will do so in their favor, with China being heavily incentivized to maintain the integrated global economy that has spurred so much growth for the nation relative to the U.S. Therefore, by sitting out, the United States may be missing its final opportunity to alter the system in its own favor. For instance, when the next WTO Appellate Body is created, the United States will likely not have the same authority over the court.

We can see how the reasons for rising protectionism in America are understandable, both within the population and political administrations. However, the movement away from globalization as opposed to a restructuring of it, in my view, is the wrong strategy. The United States can enact clear and definable policies to overcome the recent burdens of globalization, such as sharing the financial costs and benefits among its population. While the U.S. remains far ahead of other nations in terms of overall economic influence, the strategy going forward should focus on reinforcing that position through deeper, more balanced participation in the global economy, rather than retreating from it.

Disclaimer

The content published in Nummus is for informational and educational purposes only and does not constitute financial, investment, legal, or professional advice. The views expressed in this article are those of the author and do not represent the views of Nummus or its editors. Readers should not rely on any content published in Nummus as a basis for making financial or investment decisions and are encouraged to consult a qualified financial advisor before doing so.

“Before you think about buying stocks, you ought to have made some basic decisions about the market, about how much you trust corporate America, about whether you need to invest in stocks and what you expect to get out of them, about whether you are a short- or long-term investor, and about how you will react to sudden, unexpected, and severe drops in price. It’s best to define your objectives and clarify your attitudes (do I really think stocks are riskier than bonds? Beforehand, because if you are undecided and lack conviction, then you are a potential market victim, who abandons all hope and reason at the worst moment and sells out at a loss. It is personal preparation, as much as knowledge and research, that distinguishes the successful stockpicker from the chronic loser. Ultimately it is not the stock market nor even the companies themselves that determine an investor’s fate. It is the investor.”

— Peter Lynch, One Up on Wall Street

That is how Peter Lynch opened the first part of One Up on Wall Street. The chapter is called Preparing to Invest. If you notice, every single question Lynch poses are about yourself. That is what people miss about investing. You are the one putting your money at risk. You are the one deciding when to buy, when to sell, what to buy, and how much.

I was reading an article about Helix, a new infrastructure company KKR is launching with Nvidia and Vistra. At the end of the article, two statistics really sparked a curiosity in me. Global private equity and venture capital investments in the utilities sector have soared by more than 50% year-over-year to $69.52 billion in 2025, according to S&P Global Market Intelligence. And in just the first quarter of 2026, investments nearly matched all of 2025’s total, hitting $64.59 billion. If you are wondering where capital is flowing, there it is.

I knew energy companies had been performing well but wanted to see how well. Then looked at Vistra and discovered that shareholders had seen over 500% growth over the last three years. That sparked a question: is there a company out there that has not yet shot up dramatically, but is positioned to benefit from all of this continued demand? I then stumbled upon INNIO Group, a global energy technology company headquartered in Munich, Germany that just went public.

They operate under three distinct brands comprising of an incredibly rich history starting with Waukesha, a Wisconsin-born brand dating as far back as 1906 serving many different industries with their famous Waukesha gas engines. They first operated across military transportation, railway and farming, which then led the company to develop equipment for the remote oil and gas industries. Shocked, I was to find out that their products were used in farming fields to military service in both world wars, provided backup power to the Apollo space missions, and even operated the emergency lights of the World Trade Center on 9/11.

Core competency is a term you hear a lot in business, which is a company’s set of capabilities that are unique to them, rare, difficult to replicate and central to creating value. It is clear to me that the core competency of Waukesha is their ability to raise the ceiling of the future and look to innovate. Historically, they have designed engines capable of running on fuels of the future well before their time, like the Hesselman, which was equipped to run on natural gas decades before it became the fuel of choice for power generation.

As we head into an unprecedented time with artificial intelligence causing a shift in the energy landscape, Waukesha stands at the forefront once again. Today the brand operates across six distinct applications; gas compression, drill rig power, mechanical drive, backup and standby power, flare to power and electric power generation, serving the oil and gas industry across North America. They are positioned to capture growing demand tied to AI infrastructure, LNG growth and natural gas market expansion.

Similar in some respects to Waukesha and complementary is their second brand, Jenbacher, which traces back to 1959 in the small Austrian town of Jenbach, Tyrol. Where Waukesha is built around the oil and gas industry, Jenbacher's focus is fuel flexibility, the ability to run on a diversified range of gaseous fuel including natural gas, biogas, hydrogen, landfill gas, coal mine gas and furnace gases. Their signature offering is Combined Heat and Power, capturing both electricity and heat from a single engine simultaneously, making them more efficient than conventional power generation.

Spanning virtually every industry from data centers and hospitals to greenhouses, wastewater treatment plants and municipalities, Jenbacher “provides fuel flexible, durable and reliable power solutions for businesses and industries worldwide.” Another key aspect is that they provide onsite power generation which put simply is “the production of electricity right where it’s needed”. Lastly, myplant, is their AI-powered digital platform that monitors and manages their installed engines globally, enabling predictive maintenance and remote diagnostics.

Now that I’ve gone over their brands, let’s talk about how they are at the forefront of change. I mentioned that the energy landscape is changing, but what does that mean? For years we have had flat electricity demand, and you have to go back all the way before the early 2000’s to find the last time we experienced electricity demand increases of up to 30%, which was due to a growing economy and a change of consumer adoption of new electric products, and a big one being computers.

The world is getting hit with a perfect storm of data center expansion and new domestic manufacturing. Industry and government analyses from CSIS indicate that data centers could account for approximately 40% of incremental electricity demand growth in the United States, with total U.S. data center power consumption expected to more than double by the end of the decade.

Particularly in North America, the rapid adoption and deployment of AI has led to increasing demand for computing power, which has resulted in enormous investment in hyperscale and modular data centers. This has also put pronounced strain on the energy supply from the grid which has led companies or municipalities to consider Innio’s onsite, prime and backup power solutions equipment to meet their power needs, which drives demand for their equipment and services.

The need for new supply chains, new infrastructure and adaptable energy solutions puts Innio at the perfect position. Flexibility is a key advantage they have, as their engines can operate on natural gas, biogas, hydrogen, biomethane, landfill gas, coal mine gas, furnace gases and liquefied natural gas. Turnkey, flexible, and tailored to fit any power need that a customer has which makes them honestly indispensable.

If you read anything to do with investments, I guarantee you will come across the word “catalyst.” By definition, it is “a person or thing that precipitates an event.” So, if you are trying to figure out if a company has catalyst for growth, that means you need to find something that will cause that growth to happen suddenly or sooner than expected. There is not a bigger catalyst than Data center developers and hyperscalers’ continued and urgent need for Innio’s on-site, prime and backup power generation.

Data center LTM revenue as of Q1 2026 came in at 11% and $317 million, but what is partly hidden is the dramatic increase in order intake volume, where Innio has been showing remarkable growth. In 2023, $27 million in data center equipment orders, and in 2025, that number was $2.28 billion. In just the first three months of 2026, it hit $1.01 billion. To put that in perspective, Innio generated more data center orders in the first quarter of 2026 than they did in all of 2023 and 2024 combined.

These equipment orders are not realized revenue to be clear, but they are a signed financial contract with a delivery schedule, fixed price, defined terms and conditions, so it carries low risk of cancellation. Data center orders now represent 61% of all equipment order intake, yet only 11% of actual revenue. As these orders get fulfilled through the upcoming years, data center revenue will grow dramatically.

AI-driven data centers require power with operating characteristics beyond aggregate capacity, including fast start capability, high transient response, stable voltage and frequency control and the ability to accommodate large block loads. This means that power needs to be highly responsive to sudden changes in electricity demand, just as you have to be prepared for sudden changes in the price of a stock. This is a main reason the grid isn’t the most optimal solution. Innio’s high-speed reciprocating gas engine technology is perfectly suited to these requirements.

In February 2026, a major deal was announced between Innio and VoltaGrid, who signed a 1.5 GW supply agreement for 300 Jenbacher gas engines to power AI data centers, building on a prior 2.3 GW deal, bringing total contracted capacity between the two companies to 3.8 GW. This is incredible because if you put this in context, 3.8 GW is equivalent to the output of four nuclear plants.

In business everything is a race, a race to the finish line, a race against competitors, a race against time, and to win a race you need speed. Time to power has emerged as one of the most prominent considerations for data center developers. Any delay in energization stalls potential revenue, so certainty and speed of power delivery are instrumental factors in site selection. This is put clearly in the Innio’s S1 filing.

“As a result, data center operators are increasingly adopting behind-the-meter power solutions to secure certainty of supply and reduce exposure to grid constraints and curtailment risk as evidenced by the penetration of behind-the-meter and hybrid solutions, increasing from 10-20% of incremental data center power demand in 2025 to 50-60% of incremental data center power demand by 2030, according to the DOE Report and Oxcap Analytics.”

I’m going to bring up the phrase perfect storm again. Innio’s business lines are interconnected in a way that creates demand that feeds into each other. The same grid constraints driving data center operators toward onsite generation are also fueling demand for their broader power solutions, which serves utilities, municipalities, independent power producers, greenhouses and industrial facilities that face identical reliability and grid availability challenges.

For the last twelve months as of Q1 2026, power solutions generated $946 million in revenue and about $1.5 billion in order intake, making it the second largest segment today. The more demand for natural gas also creates a situation where compression is a direct benefactor as well.

Another key driver for compression equipment is stated in the most recent filing:

“Based on currently planned projects, global LNG export volumes are forecast to grow at approximately 12% per year through 2030 (Spears & Associates), increasing utilization across multiple compression “touch points” from upstream gathering through transmission and storage. This supports compression demand not only through new build, but also via higher throughput across existing systems.”

Additionally, the utilization of existing infrastructure has reached a high of 90%, which calls for a large volume of replacements, and therefore replacements of compressors. Overall, compression is technically demanding and carries high uptime requirements. (Uptime is just how long a system or piece of equipment is running and operational compared to the time being down for repairs or maintenance) This creates a strong barrier to entry for competition. Compression was the smallest portion of sales at 8% and $215 million in the last twelve months.

Finally, the most lucrative and largest part, services, which represented 47% of total revenue in the last twelve months at approximately $1.3 billion. The services segment is particularly special because Innio has an installed base of 44 gigawatts of engines in the field globally as of December 31, 2025. Each engine generates recurring revenue through maintenance contracts, spare parts and overhauls.

It is also important to recognize how widespread and entrenched they are. Their manufacturing reach spans over seven million square feet of land. Global coverage across approximately 100 countries through a commercial network that integrates direct sales, authorized distributors and channel partners.

They are investing aggressively, with the company planning to nearly triple total manufacturing capacity, with the majority targeting North America to support AI-related data center projects. I specifically remember Bill Ackman saying that if a company is spending a large portion of their capital expenditures on maintenance capex and is not investing into expanding capacity and growing manufacturing, that should be a clear sign to rethink your investment. While this is a fundamental concept, investors can easily ignore this aspect of the financials, and whether it’s a good sign or a concerning one as well.

Geographically, the company is more American than its German headquarters might suggest. According to MarketWatch, 39.7% of revenue came from North America and 39.4% from Europe, and 90% and 86% of North American revenue was derived from the United States for the three months ended March 31, 2026, and 2025, respectively.

But who owns Innio today? It’s important to ask this question because as Peter Lynch mentioned, it is the investor that determines their fate. The investor’s decision to put their hard-earned money into a company, means trusting the decisions that the owners are making. In November 2018, Advent International, a global private equity firm headquartered and founded in Boston, Massachusetts, completed a $3.25 billion acquisition of GE’s entire Distributed Power division, spinning out Jenbacher and Waukesha as a single standalone company under the Innio name. In March 2023, the Abu Dhabi Investment Authority acquired a significant minority stake.

Innio is backed by private equity, and a private equity firm’s goal is to exit, and one form of an exit is an initial public offering. You are exiting the portion of shares you are offering and returning capital to LPs. They are inclined to get the highest return. Typical timelines for exits are 5-7 years (they have actually been lengthening) and subsequently, that is what occurred. Together, Advent and ADIA brought the company public in June 2026, raising $2.73 billion at $27 per share, 20% more shares than originally planned, with the stock jumping 15% on its first day.

Purchasing any stock immediately following an initial public offering carries risk. The IPO price reflects the sellers’ best estimate of value at a specific moment, and in Innio’s case, the sellers were Advent International and the Abu Dhabi Investment Authority, who chose their exit after a historic run in energy infrastructure sentiment, to monetize their position. That is not a reason to dismiss the company however, but a reason to proceed deliberately.

There are risks worth noting and the first being that they carry $2.94 billion in long-term debt from the original leveraged buyout, which generated $163.6 million in interest expense in 2025. A spike in interest expense in Q1 2026, driven largely by foreign exchange revaluation on their debt and costs tied to the refinancing of their Jenbach facilities, pushed the quarter to a net loss of $9 million despite $189 million in operating cash flow.

It will take Innio time to pay down the debt load, but the core operations of the business are performing well, especially when you look at it from an annual perspective. 2025 revenue grew 22% to $2.64 billion, with net income of $141.8 million. Equipment order intake for 2025 came in at $3.88 billion, up 188% from 2024.

J. Woods, Chief Market Strategist at Freedom Capital Markets, put it plainly in a recent note to clients: as the AI buildout continues, Innio represents “a less obvious but potentially lucrative way to invest in the infrastructure needed to keep the lights on.”

The best returns come from getting in early. But that is extraordinarily difficult in practice, with one of the hardest parts being psychological. There is a classic social experiment where a room full of people are instructed to stand up, leaving one or two unknowing participants seated. Without explanation, those seated almost always stand, conforming to the crowd. Investing before a trend feels exactly like that. The stock is flat, maybe it’s down, people you talked about it with are skeptical, and there is always an opportunity cost underneath. The longer your money sits generating little or no return, the more the next best alternative compounds without you.

Personally, this to me is a classic picks and shovels opportunity where Innio is going to see outstanding growth and demand for their products. However, deciding whether to invest in this company requires you to ask yourself, whether you need to invest in stocks and what you expect to get out of them, whether you are a short or long-term investor, and how you will react to sudden, unexpected, and severe drops in price. It’s critical to define your objectives, clarify your attitudes and figure out what kind of investor you are, and what kind of investor are you going to be?

Disclaimer

The content published in Nummus is for informational and educational purposes only and does not constitute financial, investment, legal, or professional advice. The views expressed in this article are those of the author and do not represent the views of Nummus or its editors. Readers should not rely on any content published in Nummus as a basis for making financial or investment decisions and are encouraged to consult a qualified financial advisor before doing so.

Back in elementary school, I recall two field trips that really stuck with me. One to the aquarium, and one to the Boston Museum of Science. Part of the schedule was watching a documentary called Dream Big, and something about it stayed with me to this day. From that day forward, my curiosity and passion for science grew exponentially. I remember so many books on my summer reading list being about aquatic life, the rainforest, planets, stars, etc., all by personal choice.

During my sophomore year of university, I found myself spending time exploring fields that I had never formally studied: astrophysics, quantum physics, climate, and environmental science. What connected all of it was a deeper curiosity about the natural world that we all live in. At the same time, the urgency of climate change was becoming impossible to overlook, both for me personally and for society, with climate issues arising every year.

My senior year, I got in contact with my professor Carlos Rufin, who first introduced me to nuclear fusion after presenting my renewable energy research pitch. While conducting my research, I interviewed Professor Dennis Whyte from MIT’s Plasma Science & Fusion Center. I walked away from both conversations with a newfound appreciation for Nuclear Fusion and the impact it can make. I wrote this paper with the purpose of examining Nuclear Fusion and its potential to shift the renewable energy landscape; making meaningful progress on climate change and transforming the way we power the world.

Introduction

In the late 20th century, the IPCC Second Assessment report concluded evidence suggesting that the human race had a “discernible influence” on climate change (IPCC, 1995). This became one of the first significant international scientific statements consolidating human activity and climate change. In 1997, the Kyoto Protocol was the first primary policy response from developed nations, with a binding target of reducing emissions by 5% below 1990 levels by the 2008-2012 period (BBC News, 2011). However, cooperation proved difficult, as the U.S. refused to ratify the treaty. By 2015, the Paris Agreement engendered a wider global framework, with major industrial countries agreeing to limit warming levels well below 2 °C, with a pursuit of 1.5 °C (BBC News, 2011). However, in 2024, global temperatures exceeded this limit, rising 1.5 °C past the industrial average for the first time, with recent years being the hottest on record (Luhn, 2026). Despite these agreements, progress remains behind schedule. In the State of Climate Action 2025 report, it was concluded that progress toward joint goals as well as all 45 established indicators were well off track. Deforestation alone accounts for more than 10% of global emissions, not to mention that deforestation slows CO₂ conversion rates. Coal accounts for more than 40% (WRI, 2025).

Keeping all this in mind, demand for energy is not slowing down and could rise significantly by 2040 due to factors such as AI, data centers, electrification, industrial activity and transportation (IEA, 2023; McKinsey, 2025). We now encounter a thorny contradiction: how are we going to reduce emissions and produce more energy simultaneously? Current renewables consist of solar, wind, hydropower, biomass, ocean energy, geothermal, and the like. Despite being important pieces of the energy transition, they still produce emissions and waste in some way or another. IRENA defines renewable energy as energy that comes from natural sources that are constantly replenished. Despite this, renewables have their limits. Solar and wind depend on weather conditions, while hydropower and geothermal energy can only be utilized in certain geographical areas. In addition, anything large-scale needs storage and infrastructure. Therefore, the large-scale energy transition we have in mind will not be able to rely solely on one solution alone (IRENA, 2016). This is where nuclear fusion is introduced.

MIT’s Plasma Science and Fusion Center has collaborated with CFS to construct SPARC, the world’s first fusion technology that produces plasmas with net fusion energy. Following the adequate development and growth of SPARC will come ARC, the world’s first fusion power plant. The significance of the project is exemplary as it is the first step taken toward a carbon-free, mass-produced, and limitless energy that is compact, economical, and safe (CFS, n.d.; MIT PSFC, n.d.).

While fusion is very promising, this does not make it economically or commercially viable yet. Running a successful fusion power plant is not comparable to an experimental success. Commercial fusion in its current stage still requires substantial development in plasma confinement, durable materials, heat extraction, power conversion, grid integration, safety systems, and regulatory approval. All of which vary by region. Fusion is not only a scientific issue. It is an economic, engineering, regulatory, and deployment issue. Therefore, fusion must be assessed holistically as a whole system rather than the process alone. So far, fusion is scientifically credible and has major potential long term to provide massive amounts of clean energy but is not yet commercially developed. The future of fusion will ultimately depend on whether we can successfully progress past engineering, scaling, regulatory and integration obstacles. This paper will assess whether nuclear fusion is viable as a large-scale commercial energy source (Haber, 2025; Ward & Lopes Cardozo, 2025).

What Is Fusion?

Nuclear fusion is a subatomic process that merges atomic particles, more specifically light hydrogen isotope nuclei, deuterium and tritium. When combined, the process releases a substantial amount of energy since the resulting mass is lighter than the original. The missing mass is then converted to energy via relativity (E = mc²). This merging is a defining characteristic of the process, and is not to be confused with nuclear fission, which is the splitting of a large nucleus. This reaction results in helium, a neutron, and substantial amounts of energy. Enough to power a city. This process is also what powers our sun and stars (Haber, 2025; Trinh, 2021).

The primary difficulty with this process is the extreme conditions that need to be harnessed and contained in order for fusion to work. Since the particles are both positively charged, they will naturally be repelled from one another. Therefore, a certain speed and temperature are required in order for the collision to result in fusion. This temperature is undoubtedly high, in the range of millions of degrees, at which point matter becomes classified as plasma. Plasma is a state in which electrons and nuclei are separated, allowing charged particles to move freely. The catch with this is that the plasma cannot by any means touch the walls of the reactor, because it can cool down and damage the walls of the reactor. That is why plasma confinement is a crucial piece of the puzzle, with the primary option being magnetic confinement (Haber, 2025).

Tokamaks and stellarators are the two primary approaches to this, with tokamaks having a doughnut shape that confines the plasma while stellarators utilize complex, twisted magnetic fields. As of late, advanced superconducting magnets were developed and tested in SPARC, with the significance that it can make reactor designs even more compact and commercially viable (CFS, n.d.; ITER Organization, n.d.; MIT PSFC, n.d.).

All that being said, a successful fusion reaction does not mean the job is done. Dennis Whyte emphasized this distinction in an interview, “You have to extract the energy…and put it in a usable form” (Whyte, personal communication, 2026). This supports the idea that a commercial power plant must do more than produce reactions. It must produce more energy than it consumes, extract and convert heat efficiently, operate reliably and safely, and withstand extreme neutron bombardment over time. Additionally, it needs fuel cycle systems, cooling systems, shielding, maintenance accessibility, and grid connection. Overall, although the scientific foundation of fusion is established, further development still needs to be made commercially and economically prior to deployment. This distinction is central to understanding that fusion’s viability is not in question due to the science that backs it, because on paper it is very appealing; but rather the conditions that are required and need to be sustained in order for fusion to scale commercially (Haber, 2025; Lo & Whyte, 2024; Ward & Lopes Cardozo, 2025).

Scaling Fusion for Commercial Use

When discussing how fusion will scale, projects like SPARC can give a good example of what is considered compact in the context of fusion; it is important to note that this does not mean compact in the traditional sense. SPARC was not intended to be commercial, so they did not develop it that way. However, SPARC remains smaller than other fusion projects because “the size of the device is extremely sensitive to the strength of the magnetic field” (Whyte, personal communication, 2026). This gives background to why superconducting magnets are impactful: the stronger the magnetic field, the smaller the size of the reactor.

As the follow up design, ARC will be developed with the intention of being a power production system. The expected scale is anywhere from 200-250 megawatts which makes it a serious industrial facility. What this means commercially is that it will require more capital, specialized infrastructure, will have longer construction timelines, and is a bigger risk financially. Even if fusion does develop into a more compact design, there will still be difficulties of operating energy infrastructure that large (CFS, n.d.; Sorbom et al., 2015).

The next barrier is engineering durability. Internal components would have to constantly be operating under extreme heat, stress, and neutron bombardment which can damage materials over time. “The relative risk is starting to emerge…around materials, heat, exhaust, and so forth” (Whyte, personal communication, 2026). Ensuring that reactor materials can withstand all the wear over time is essential. Replacing and repairing parts becomes a commercial and economic issue due to the downtime and specialized maintenance raising operating costs; indirectly impacting profitability (Haber, 2025; Sorbom et al., 2015).

Build time is another obstacle that affects fusion viability. Commercial technology becomes easier, quicker, and cheaper to build once a learning curve is surpassed. However, this process takes more time for larger and complex projects. This means that there are fewer chances to learn and reduce costs along the way. That is why smaller models are much better for deployment. However, so far, we only have projects like SPARC to look to for reference. Therefore, exact construction timelines are indefinite, as commercial fusion has not yet been put in motion. Economically, this means that investment will prove to be more difficult to obtain because investors and policy makers cannot be certain of build schedules, timelines and relevant cost reductions (Lo & Whyte, 2024; Ward & Lopes Cardozo, 2025).

Overall, one element that is central to dictating the feasibility of commercial nuclear fusion is scaling. In principle, fusion seems viable because the science is credible and progress has been made on many fronts. However, turning science into integrated and operating infrastructure that meets all standards is challenging. This is not a minor detail that can be easily worked out after the science is perfected. This is a deciding factor in whether or not fusion will be commercially viable. Scaling is difficult for numerous reasons. Engineering is a significant first step, but when scaling, other factors such as region-specific regulations, investment fund accessibility, implementation, etc. all come into play (RMI, 2024; Ward & Lopes Cardozo, 2025).

Integration

Theoretically, if fusion can be scaled into a functioning power plant, the next question that comes to mind is how well fusion energy systems can integrate into already existing systems. For fusion to make an impact commercially, it needs to be useful to the grid. There are demands that need to be met; production has to match demand, systems have to fit into already existing infrastructure, and operate within the same energy markets. Even if fusion produces energy, it won’t matter if energy cannot be produced in the correct quantities, reliably, affordably, and at the right time (Haber, 2025; Ward & Lopes Cardozo, 2025).

The role fusion may have in energy systems is being a source of clean and large-quantity energy. Fusion is unlike solar or wind, which produce intermittently, depending on weather conditions. If reliable, fusion could provide a steadier stream of electricity. This would best fit and be of most value in systems where there is gradually growing amounts of intermittent energy. If fusion systems operate reliably, they can make up for supply gaps when solar or wind output is low. This is largely dependent on the efficiency of the tech, because if there are frequent setbacks due to maintenance, the downtime will cause major delay and negate usefulness. Siting requirements are also an important point to keep in mind because fusion systems have operational requirements as mentioned previously. Regionally, grid needs, regulations, cooling access, land availability, proximity to transmission, as well as public acceptance all affect siting. Fusion may have developed engineering and design, but is the infrastructure required to run it available? (Haber, 2025; Sorbom et al., 2015).

Another small thought to consider is whether fusion can have other uses besides electricity. In theory, it can serve for desalination, hydrogen/fuel production (hydrogen derivatives), heat, etc. This matters because some industries do not need electricity to decarbonize, but rather high temperature heat for example. However this is currently a theoretical outcome since no fusion plant has yet proven that reliable production of these materials is feasible (Ward & Lopes Cardozo, 2025).

Integration is another unsolved piece to the puzzle. Fusion must prove that it can operate reliably, connect to the grid, meet siting and infrastructure requirements, and compete with other energy tech in order to successfully integrate (Haber, 2025; Ward & Lopes Cardozo, 2025).

Economic and Commercial Viability

If fusion can be scientifically perfected and integrated into the grid, the next step would be establishing its future commercially. That depends on economics. Cost competitiveness is a major deciding factor in the commercial success of fusion. However, an important factor to consider is the fact that commercial plants do not yet exist. Therefore, any numbers available as of now are projections rather than calculated costs. The uncertainty is an issue in and of itself, because investors are wary of commitment to projects with ambiguity regarding many of its elements (Lo & Whyte, 2024; Ward & Lopes Cardozo, 2025).

Construction Cost

A major economic uncertainty is cost. As mentioned previously in the scaling section, fusion plants are complex, large, and not simple to construct. Timelines and costs are indefinite for a SPARC or ARC style plant. Superconducting magnets, shielding, cooling, tritium handling, and power conversion equipment are all specialized and required parts that are not easy to secure. Therefore, construction cost can be perceived in this case as more of an unresolved risk rather than a known level of investment (CFS, n.d.; Sorbom et al., 2015; Ward & Lopes Cardozo, 2025).

Operating Costs

Operating costs are one of the primary costs that are ongoing and must be weighed. For fusion to be competitive, it has to operate at a reasonable cost per megawatt-hour. This depends on how frequently the plant can produce and sell electricity without downtime. The more setbacks, the higher the cost per unit of electricity, while also incurring maintenance costs (Lo & Whyte, 2024; Ward & Lopes Cardozo, 2025).

Tritium

Tritium is debated on when discussing its pertinence to fusion economics. It does have its role, but should not be overstated. In an interview with Dennis Whyte, he explained that the tritium concern is exaggerated, because many arguments are based on outdated assumptions. The CANDU reactors in Canada have a tritium supply that is “sufficient to actually start a fusion industry” (Whyte, personal communication, 2026). Whyte went further in depth, stating that the long-term fuel cycle depends more heavily on deuterium and lithium, because tritium is produced in reactions involving lithium. This does not mean tritium is irrelevant, but rather “the thing that’s in the in-between” (Whyte, personal communication, 2026). Therefore, tritium should be perceived and treated as a fuel cycle management issue rather than a barrier to viability.

Market Entry

Realistically, the best suited market entry for fusion would be to target high-value customers first, then later shift to broader competition with other affordable energy sources in the market. In early stages, fusion will fit best in high energy demand industries such as data centers, military facilities, regions with high cost of electricity per unit, and regions with emphasis and requirements on clean energy. These are regions like the EU and Asia. These customers may be more open to paying a premium for consistent, low-carbon energy because that is what their operations depend on. Once operations become more cost efficient, fusion can look to expand into broader regions (Lo & Whyte, 2024; RMI, 2024; Ward & Lopes Cardozo, 2025).

Economic Takeaway

Overall, the economics of fusion remain unresolved, but still promising. If all obstacles can be surpassed, fusion has the potential to cause a major economic shift in the energy market. However, the commercial case is not yet fully proven (Lo & Whyte, 2024; Ward & Lopes Cardozo, 2025).

Regulatory, Safety, and Environmental Viability

If fusion surpasses economic and scientific challenges, it then has to meet regulatory, safety and environmental standards before deployment. New energy technology and infrastructure always have to be licensed and accepted by the public. Fusion has many safety advantages compared to fission, but is not risk free when considering radiation shielding, activated materials, etc. One of fusion’s strongest advantages is that it does not have the same runaway chain reaction as fission. Fusion depends on very specific plasma conditions, so if those conditions are disrupted in any way the reaction will not carry through, which diminishes meltdown risks. However, regulations remain constant, as tritium still needs to be contained and monitored, and activated material waste has to be managed during operation and decommissioning (Haber, 2025; ITER Organization, n.d.).

Fusion is very environmentally positive, because it does not produce any fossil fuel emissions. However, it is not completely impact-free. Construction materials, cooling systems, infrastructure, radioactive waste management, etc. are all still needed. It is still much lower profile in terms of waste, but they should still be considered when judging fusion as a whole. Fusion does admittedly have many environmental and regulatory strengths, but that does not guarantee flawless deployment and growth. Therefore, environmentally, fusion is comparatively safe, but still dependent on solid regulation and controlled deployment (Haber, 2025; ITER Organization, n.d.).

Overall Viability Assessment

When assessing fusion holistically, the answer is dependent on the form of viability discussed. Scientifically, fusion is credible and has been successfully tested. The basic physics is understood, and SPARC shows that we are moving closer to developing practical commercial applications. From an engineering perspective, fusion is incomplete. The goal is not only to produce a reaction, but to sustain a plant that operates as it’s expected to. This matters because it determines if fusion can be developed into a legitimate system. All things considered, fusion still shows promise engineering-wise (CFS, n.d.; Haber, 2025).

Economics remains one of the most uncertain domains in fusion. Since we have no legitimate cost figures to refer to, we have no numbers to look at in terms of costs in any sense. We cannot determine if fusion can be considered commercially viable until it proves that it can be affordable, repeatable, and operate efficiently with minimal downtime (Lo & Whyte, 2024; Ward & Lopes Cardozo, 2025).

Regulatory and environmental viability are favorable because fusion does not produce any fossil fuel emissions, nor does it carry the same reaction risks as fission. However, as stated prior, fusion does not come without risk; this does not negate viability, but does mean that deployment will require careful management. (Haber, 2025; ITER Organization, n.d.).

Finally, an important point to mention that is central to the viability of fusion is education and community development. “It’s not just about the technology, it’s… the ecosystem…there should be way, way more people… coming with fusion, with a wide variety of different skills.” (Whyte, personal communication, 2026). Academia, companies, and educated workers are all the basis of what it takes for fusion to have accelerated growth. The fusion industry needs more teachers, students, professionals, researchers, engineers, market experts, and regulators that understand fusion from various angles to make this market succeed (Whyte et al., 2023).

Conclusion

Fusion remains one of the most compelling long-term possibilities in renewable energy. Its potential capacity is unlike any technology we have today, and if perfected, can cause a shift in the paradigm. However, it is not yet ready to expand, and its success depends on the resolution of economic, regulatory, engineering, and infrastructure barriers. Therefore, fusion should be understood as a developing but promising technology with major potential. If fusion reaches the required level of maturity, it could become a major part of clean power generation in the future. Until then, its feasibility is plausible but developing.

Disclaimer

The content published in Nummus is for informational and educational purposes only and does not constitute financial, investment, legal, or professional advice. The views expressed in this article are those of the author and do not represent the views of Nummus or its editors. Readers should not rely on any content published in Nummus as a basis for making financial or investment decisions and are encouraged to consult a qualified financial advisor before doing so.

Students on a typical college campus can explain concepts from economics or chemistry classes, yet many would struggle to explain how a credit score works or what a 401k actually does. Through my work assisting financial literacy programs in both high school and college, I have had the opportunity to speak with many students about personal finance. What surprised me was how many lacked confidences in topics such as budgeting and saving, despite having unlimited access to financial information online.

During my first year of college, found myself becoming aware of these same issues. For many students, college is the first time they begin managing their own finances and making decisions that can have long-term financial consequences. Seeing these challenges firsthand made me interested in understanding why financial literacy remains such a widespread problem. As I looked deeper into the issue, discovered that technology has played a major role in changing the way people access financial information and make financial decisions.

While today’s technology has made our everyday life faster and more efficient, it has also made money easier to spend and harder to understand. The adult financial literacy rate in the United States has dropped to its lowest level in over a decade, and many are struggling with basic life skills such as understanding credit scores and budgeting. Why? A major factor is the misinformation and confusion the internet has created around personal finance.

Many American high school students are required to take a financial literacy course, but its effectiveness remains unclear, especially given that two-thirds of Americans cannot pass a basic financial literacy test and 63% report feeling anxious about their finances. It is also not the case that Americans are struggling with harder financial concepts, such as investments or retirement accounts. It has been found that the current top financial obstacles for individuals over 30 are found to be excessive expenses, lack of savings, and too much debt.

Problems such as overspending and lack of financial planning are particularly concerning, as this means many Americans are not prepared in the case of an unexpected expense such as a medical emergency or car repair. Both these situations can cost up to thousands in expenses, and it has unfortunately been found that 1 in 3 Americans lack enough savings to cover even a $400 emergency. To add, around 57% of Americans actually live paycheck to paycheck. To people from other countries, such as Denmark and Norway who have national financial literacy rates of over 70%, this must look incredibly alarming.

The root of these problems is not simply a lack of financial education. Instead, modern technology has fundamentally changed the way people interact with money. From contactless payment services to social media influencers and subscription-based apps, technology has made spending easier than ever while often obscuring the true cost of financial decisions.

Novel technologies such as Apple Pay, which millions of people use every day, have transformed how consumers interact with money. By allowing purchases to be completed with just the tap of a phone or smartwatch, digital payment systems remove the physical exchange of cash and make spending feel somewhat effortless. Studies have found that this shift reduces the psychological “pain of payment,” making individuals less aware of how much they are spending and more likely to make impulsive purchases. As a result, many consumers lose track of their expenses, contributing to overspending and making it more difficult to maintain a budget.

Worry About It Later

“Buy now, pay later” services such as AfterPay and Klarna have become a popular feature on many online shopping platforms, which allow consumers to pay for purchases in smaller installments rather than paying the full cost upfront. While this may make expensive items appear affordable, it can also create a misleading sense of financial security. By focusing attention on the size of individual payments rather than the total cost of a purchase, these services encourage consumers to spend more than they otherwise would. Many users accumulate multiple payment plans at once, with nearly 47% of consumers missing a payment within the past year, significantly increasing the risk of long-term financial strain.

Financial “Advice”

While social media has made financial information more accessible than ever, it has also made misinformation that much more common. Nearly 80% of young adults turn to social media for financial guidance, yet a significant portion of this content is unreliable. Platforms such as TikTok and Instagram often promote eye-catching financial content because it attracts far more views than practical advice about budgeting, saving, and long-term investing. In fact, 71% of financial advice consumed by Gen Z and Millennials is misleading, and only 13% of influencers sharing financial content have the relevant qualifications or credentials.

This leaves younger audiences severely exposed to misleading information about stocks and other investments without fully comprehending the risks involved. Many influencers promote get-rich-quick schemes and unrealistic promises of financial success, creating the illusion that wealth can be easily attained. Rather than learning strong financial foundations, users are encouraged to chase trends, greatly increasing the likelihood of expensive financial mistakes.

Losing Track of Platforms

The rise of financial apps has made managing money more convenient but has also made it easier to lose sight of one’s overall financial situation. Many consumers now have accounts spread across digital wallets, investment platforms, loyalty programs, and many more apps. While each platform provides information about a specific account, few offer a complete picture of a person’s finances. Individuals may struggle to accurately track their spending and savings. Subscription-based services further enhance this issue, as recurring charges often go unnoticed once they are linked to a credit card. Nearly 60% of consumers are paying for subscriptions they have forgotten about, gradually draining money that could otherwise be saved or invested.

Long-Term Consequences on People’s Lives

One of the most significant long-term impacts of financial illiteracy is delayed retirement. Many individuals fail to take advantage of retirement accounts such as 401(k)s and IRAs because they do not fully understand how these programs work or the benefits of investing early. As a result, they miss out on years of potential growth and may accumulate far less savings than they actually need for retirement. This often leaves people with no choice but to continue working later in life or struggle financially during their retirement years.

Financial literacy affects not only individuals now but also future generations. Parents often pass their financial habits on to their children. Families without a strong understanding of budgeting and saving may struggle to build assets or accumulate wealth, leaving future generations with fewer financial opportunities. Over time, this can create a cycle in which financial insecurity is inherited rather than overcome.

Poor financial decisions can also increase the cost of everyday life. Individuals who accumulate excessive debt or miss payments will likely see their credit scores decline, making it more expensive to borrow money in the future. Lower credit scores can result in higher interest rates on mortgages and credit cards, costing individuals thousands of dollars over their entire lifetime.

The lack of financial knowledge can prevent individuals from taking advantage of opportunities to build long-term wealth. Concepts such as investing and real estate can often be essential to accumulating and growing assets over time. Without this knowledge, many people avoid investing altogether or make poor financial decisions based on misinformation. They miss out on the primary tools that have historically helped individuals and families achieve financial stability and economic mobility.

Ways To Improve Your Financial Literacy

Improving one’s financial literacy firstly begins with improving their financial habits. Taking time to reflect on spending patterns and financial goals can help individuals identify areas for improvement. Small changes, such as tracking expenses or setting savings goals, can make a significant difference over time and encourage more intentional financial decision-making.

One of the most effective ways to manage money is by creating a budget. A popular method is the 50/30/20 rule, which recommends allocating 50% of income to necessities such as housing and bills, 30% to wants, and 20% to savings or debt repayment. Having a specific budgeting framework gives many people a clearer way to understand where their money is going and avoid unnecessary debt.

Financial literacy is also a skill that can be developed through continuous learning. Taking the time to understand concepts such as credit scores, retirement accounts, taxes, and compound interest can help individuals make more informed decisions. There are countless resources available online such as financial blogs, budgeting tools, educational videos, online courses, and government-sponsored programs designed to improve financial knowledge. Some of my personal recommendations include Khan Academy and the Consumer Financial Protection Bureau.

Finally, staying informed about current economic conditions can help individuals make smarter financial decisions. Following reputable financial news sources such as The Wall Street Journal and The Economist and understanding major economic trends can provide valuable context for decisions involving saving, investing, borrowing, and spending. The economy is ever changing and staying informed allows individuals to adapt to different conditions and make decisions with more confidence.

Ultimately, the current state of financial literacy in the United States is a major concern that requires urgent attention. The rapid rise of technology has improved convenience and access to financial tools, but it has also made spending less tangible, borrowing more accessible, and misinformation more widespread. These concepts have contributed to long-term consequences that affect individuals’ ability to live comfortably and build stable futures. From delayed retirement and rising debt to reduced economic mobility and generational cycles of financial insecurity, the impact of financial illiteracy extends far beyond just basic money management.

With this, it is so important for individuals to take advantage of the resources at their disposal. With stronger financial education and a greater awareness of how technology affects financial behavior, individuals can make smarter financial decisions and build more secure futures.

Disclaimer

The content published in Nummus is for informational and educational purposes only and does not constitute financial, investment, legal, or professional advice. The views expressed in this article are those of the author and do not represent the views of Nummus or its editors. Readers should not rely on any content published in Nummus as a basis for making financial or investment decisions and are encouraged to consult a qualified financial advisor before doing so.

In 2021, Latin American deal volume was hitting records, Brazilian tech companies were listing in New York, and global investors who had spent years avoiding the region were suddenly paying attention. Then came the rate hikes, the political turbulence, the currency pressure, and the pullback. By 2024, Brazil’s deal market had contracted sharply from its peak.

It is tempting to read that arc as the whole story: Latin America as a place that promises more than it delivers, that rewards patience only to punish it. But that reading misses something important. The boom-bust cycle was real, but so was the recovery that followed. The underlying reasons to care about the region did not change because global rates went up for two years.

What changed is that capital got selective. And selective capital, in a market that most people still underweight, tends to find the better deals.

The Gap That Keeps Not Closing

Latin America represents roughly 7% of global GDP. It commands well under 2% of global private equity capital. The entire region’s combined PE and venture capital assets under management sat at $56.6 billion in 2024. North America’s PE market alone is valued at over $3.2 trillion. You can debate the reasons for that gap, and there are real ones, but it is hard to argue that it reflects a sober assessment of fundamentals rather than habit, risk aversion, and unfamiliarity.

When I first came across that comparison (7% of global GDP, under 2% of global PE capital) I had to look at it twice. It is the kind of number that should prompt a real question about whether the conventional wisdom on Latin America is actually grounded in the current reality of the region, or in a version of it that is twenty years out of date.

The region holds over 40% of the world’s copper reserves, more than half of its known lithium deposits, vast agricultural capacity, and one of the fastest-growing internet populations on earth. These are not emerging advantages. They are advantages the world already needs and is about to need more urgently. The energy transition, the AI buildout, global food security: all roads run through Latin America in one way or another. And yet the capital allocation barely reflects it.

Under a bull case driven by structural reforms, falling rates, and supply chain realignment, regional capital markets could nearly triple from $2.4 trillion in 2024 to $6.3 trillion by 2035. That is not a base case. But it is not fantasy either. It is what happens when a region that has been consistently underweighted starts attracting capital in proportion to its actual weight in the global economy.

There is a hyperfocus on the U.S. in global finance, and the U.S. market earns that attention, but I do think it causes investors to miss what is building elsewhere. A near-tripling of capital markets in a decade, would be one of the more significant wealth creation events in a generation.

What’s Actually Happening on the Ground

The 2021 boom and subsequent pullback gave the region’s recent history a misleading shape. Brazil saw deal volume jump 40% in the first half of 2025 compared to the same period a year earlier, driven by clean energy and infrastructure. Mexico’s story is increasingly about nearshoring. As manufacturers rethink their dependence on Asian supply chains, the country keeps attracting industrial and logistics capital that has few comparable alternatives in the Americas. General Atlantic’s investment in Jüsto, a digital grocery platform, in late 2024 was a small deal by global standards but a telling one: it reflects a conviction that consumer tech in the region has durable growth ahead of it.

Colombia and Peru tend to get overlooked in conversations dominated by Brazil and Mexico, but they deserve more attention. Colombian equities are trading at valuations that look cheap by any reasonable measure. Peru’s economy has been more resilient through the global trade disruptions of 2025 than most forecasters expected, supported by mining investment and relatively disciplined macro management. Chile remains the most institutionally stable market in South America. Argentina is high-risk and high conviction, but the reform momentum under the current administration has been more durable than skeptics predicted.

Why the Thesis Is Stronger Than It Looks

Latin America’s fintech sector has grown 340% since 2017. That sounds impressive until you realize it is growth off a very low base, which means the opportunity ahead is still larger than the opportunity already captured. Tens of millions of people in the region still lack reliable access to basic financial services. The companies building payment infrastructure, lending platforms, and insurance products for that population are not riding a trend. They are filling a gap that the traditional banking system spent decades ignoring.

The commodity story is simpler and harder to argue with. The energy transition requires copper and lithium at a scale that the world is not yet equipped to supply. Latin America has both, concentrated in Chile, Peru, Bolivia, and Argentina. That is not a soft investment thesis. It is a physical constraint on a global industrial shift, and the capital flowing into extraction, processing, and the logistics around it does not have many alternatives.

On the demographic side, the region’s 680 million people are younger and more urban than most of the world, and they are spending on healthcare, consumer goods, and digital services that incumbents are not well positioned to deliver. Under a high-case scenario, investment as a share of GDP could rise from 20% today to around 28% by 2040, a trajectory that mirrors what China and India looked like in the decades before their growth became impossible to ignore.

And then there is valuation. Latin American equities trade at multiples well below U.S. and European levels. In private markets, where the competition for deals is thinner, mid-market buyouts are still being done at prices that simply do not exist in more developed markets.

The Risks, Honestly

None of the above is an argument that Latin America is easy. It is not. The region has a genuine history of handing investors losses at exactly the moment they least expect it, and the mechanisms that produce those losses (currency volatility, political reversals, thin exit markets, regulatory uncertainty) are still present.

Currency is the issue that never fully goes away. The Brazilian real and Argentine peso can move sharply and without much warning, and when they do, dollar-denominated returns take the hit regardless of how the underlying business is performing. Hedging is expensive and imperfect. Going unhedged means accepting real volatility in outcomes. There is no clean answer here.

Getting out is harder here than in more liquid markets. IPO windows are narrow and unpredictable. No private equity-backed company in Brazil has managed to list since 2021. The secondary market for PE stakes is thin. Between 2023 and mid-2025, the total number of regional exits barely kept pace with what happened in 2021 alone. If you need liquidity on a short timeline, Latin America is going to test you.

Political risk is real and varies significantly by country. Colombia and Mexico are both navigating electoral uncertainty. Brazil’s macro environment carries elevated risks in 2025, though structured transactions are broadly expected to hold up. The honest version of the Argentina story is that the reform agenda has exceeded expectations, and also that Argentina has exceeded expectations before and then reversed. Conviction is warranted. Certainty is not.

Where the Opportunity Concentrates

Given the risks, where does the case actually hold up? Looking across the research and deal activity covered in this piece, a few areas keep coming up. Infrastructure and energy transition (clean power, data centers, logistics) where assets tend to have long-term contracted cash flows and benefit from both government policy and the commodity shift. Financial services and fintech, where the unbanked population represents one of the largest concentrations of unmet demand anywhere in the world. Healthcare, where insurance penetration is low and a growing middle class wants better options than what currently exists. Consumer and digital commerce, where e-commerce penetration is still well behind more developed markets and the platforms that solve last-mile logistics in Brazilian and Mexican cities are building genuinely durable businesses. And agriculture, where Brazil and Argentina already feed a significant share of the world and the next wave of efficiency gains, from precision farming to supply chain technology to biological inputs, is still ahead of them.

These are not niche themes. They are the basic infrastructure of a modern economy, still being built. That is, depending on how you look at it, either the risk or the opportunity.

A Final Thought

The copper and lithium are in the ground. The demographics are what they are. The digital adoption is happening with or without foreign institutional money. None of that changes based on how the region is perceived in New York or London.

The 2021 moment came and went, and a lot of capital that arrived late left early. What is reassembling now is quieter and, probably, more durable. The macro tailwinds are real. The valuations are still attractive. The structural gaps that make the investment case compelling have not closed. I think this is one of the more interesting places to be paying attention right now, and I also think most people are not. That gap in attention, much like the gap in capital allocation, tends not to stay open indefinitely.

Disclaimer

The content published in Nummus is for informational and educational purposes only and does not constitute financial, investment, legal, or professional advice. The views expressed in this article are those of the author and do not represent the views of Nummus or its editors. Readers should not rely on any content published in Nummus as a basis for making financial or investment decisions and are encouraged to consult a qualified financial advisor before doing so.

For the better part of the last three years, capital has sat still. Rising interest rates, compressed valuations, and the hangover from 2021’s peak dealmaking environment kept private equity firms largely on the sideline. The result was a buildup the industry has rarely seen. As of early 2026, according to EdgePoint Capital, more than $2.5 trillion in dry powder remains undeployed globally, with approximately $1 trillion sitting in U.S.-based funds alone. GPs (General Partners) are not waiting by choice. ABF Journal, citing Bain & Company’s midyear 2025 report, notes that of the $1.2 trillion in global buyout-specific dry powder, nearly a quarter has been held for four years or longer, making deployment increasingly urgent as LPs (Limited Partners) pressure fund managers to act before their investment windows expire.

Yet the pressure to deploy is running headlong into a structural problem. Private equity is sitting on a record backlog of companies awaiting an exit. The industry entered 2026 with at least 31,000 portfolio companies valued at $3.7 trillion still looking for a way out, pushing the average buyout holding period to 6.7 years. Goldman Sachs CFO Denis Coleman acknowledged the moment, noting that dealmaking is improving with many “jumbo” deals now percolating, but the backlog remains the defining constraint on the industry’s ability to recycle capital and raise new funds.

The macro backdrop is finally shifting in PE’s favor. The Federal Reserve cut rates three consecutive times in the back half of 2025, bringing the federal funds rate to a range of 3.50% to 3.75%. Inflation has moderated meaningfully from its 2022 and 2023 peaks, giving both buyers and lenders more confidence in projecting forward earnings. Interest rate volatility eased through the back half of 2025, financing costs slowed, and strategic buyers began re-engaging as exit routes reopened. Morgan Stanley noted that M&A has troughed at a three-decade low relative to U.S. GDP and believes the current recovery cycle has several more years to run. The pressure to act is colliding with an improving macro environment and nowhere is that collision more interesting than in the lower middle market.

What is the Lower Middle Market?

The lower middle market, defined by CLA Connect as companies with enterprise values between $10 million and $250 million, has historically been written off as too small, too operationally intensive, and too illiquid for institutional capital to care about. That perception is changing. Half of all first-time funds closed in 2025 focused on the lower middle market or the SME (Small and Medium-sized Enterprise) segment, with investors migrating down-market to capture alpha and diversify exit paths.

The logic is simple. Larger funds chasing billion-dollar transactions are competing in a market where every deal is fully banked, fully priced, and fiercely contested. According to BDO, (a global business advisory firm) mega funds are turning nine-and ten-figure transactions to deploy their record levels of dry powder, recognizing that fewer; larger deals are more efficient to execute at scale. That concentration of capital at the top end of the market is exactly what creates the opening below it.

In the lower middle market, founder-led businesses are often never formally marketed. Deals are sourced through relationships, sector expertise, and proprietary outreach. The firm that gets there first, with the right credibility and the right capital structure, frequently wins without an auction.

The Buy-and-Build Moment

The dominant strategy defining lower middle market PE activity right now is buy-and-build. Add-on acquisitions now comprise over 75% of total buyout activity, as platforms use tuck-in strategies to deploy incremental capital, build enterprise value through consolidation, and avoid the full diligence burden of evaluating entirely new management teams.

The math is compelling. Imagine a firm acquiring a platform business at a 5x or 6x EBITDA multiple, then adding smaller, fragmented competitors at similar or lower multiples. As the combined business grows in scale and operational sophistication, it can earn a re-rating at exit, often to a strategic or larger sponsor at a 9x or 10x multiple. The spread between entry and exit multiple, applied across an entire consolidated platform, is where the real value is created.

Fragmented industries such as healthcare, industrials, value-added distribution services, and technology and business services attract PE buyers because of the opportunity to consolidate markets that have never had a single dominant operator. These are industries where geography, family ownership history, and the absence of institutional capital have kept dozens of regional players alive without any of them reaching meaningful scale. A PE-backed platform with capital, operational infrastructure, and a repeatable acquisition playbook can change that dynamic quickly.

Financing Is Opening Back Up

None of this works without debt, and for most of 2022 through 2024, debt was either unavailable or too expensive to underwrite a return. That is changing. According to Morgan Stanley’s 2026 private equity outlook, the average cost of funding for a PE middle market term loan has fallen by three percentage points from the prior peak, with room to move lower given the outlook for additional Fed rate cuts.

Lenders remain selective, but capital is available for quality assets. Senior debt will flow toward businesses with strong margins and recurring revenue, while equity-heavy structures and mezzanine financing are being used to bridge gaps where senior lenders won’t stretch. The ability to build creative capital stacks, combining senior debt with private credit and seller rollover equity, has become a core competency for firms operating in this space.

Where the Opportunity Is Most Concentrated

Not every sector in the lower middle market is equally attractive right now. Cherry Bekaert’s 2025 private equity report identified professional services, encompassing accounting, wealth management, financial advisory platforms, and consulting, as one of the most active areas throughout the year, driven by predictable demand, fragmented markets, and the pace of technology implementation in historically slow-to-change businesses.

Healthcare has also become a focal point. Sponsors are deploying capital into scalable niches like behavioral health, value-based care, and AI-enabled services, consolidating fragmented physician groups into efficient outpatient models and using digital tools to drive margin expansion. Aging demographics, defensive cash flows, and extreme fragmentation make the sector a near-perfect fit for the buy-and-build playbook.

Technology-enabled services sit at the intersection of both themes. Businesses delivering recurring, software-adjacent services with high customer retention and low capital intensity are commanding premium valuations. More than half of PE-controlled middle market portfolio companies now have active AI initiatives, and a majority believe AI will become material to their growth thesis.

The Differentiation Problem

Capital alone is no longer enough to win deals in the lower middle market. CLA Connect notes that independent sponsors have matured and now compete aggressively for founder-led businesses, bringing sector experience and flexible structures that resonate with sellers who are often going through this process once and for whom the right fit matters as much as the highest bid.

The firms pulling away from the competition are doing so through speed, specialization, and operational credibility. A founder who spent 25 years building a regional business is not simply looking for the best number. They want a partner who understands their industry, has a clear plan for growth, and can close without retreating. Firms that deliver on all three, backed by a track record in the sector and a demonstrated ability to build platforms, are consistently winning deals that pure financial buyers cannot.

With inflation moderating and borrowing costs trending lower, the market is entering a period that favors disciplined execution and operational value creation, exactly where middle market managers have historically excelled.

The Window Is Open, But It Won’t Stay That Way

The conditions favoring the lower middle market right now are a product of a specific moment: rates falling, mega funds distracted by large transactions, and a generation of baby boomer business owners entering succession with no clear internal buyer. EdgePoint Capital also points to the growing number of family offices focused on middle market opportunities across business services, industrials, and healthcare as a new class of competitive buyer entering a space that was once the exclusive domain of traditional PE.

Every one of those tailwinds has a shelf life. As rates fall further, more capital rotates down-market. As more firms recognize the opportunity, proprietary deal flow gets harder to protect. The lower middle market is compelling today because it has not yet been fully discovered. The firms that move with conviction now, with sector focus, operational depth, and creative capital structures, will define the top of the return distribution for this vintage. The rest will arrive just in time to find the window already closed.

Disclaimer

The content published in Nummus is for informational and educational purposes only and does not constitute financial, investment, legal, or professional advice. The views expressed in this article are those of the author and do not represent the views of Nummus or its editors. Readers should not rely on any content published in Nummus as a basis for making financial or investment decisions and are encouraged to consult a qualified financial advisor before doing so.

What if learning about sustainability felt more like playing a game than sitting through a lecture?

That was the idea behind a new research project I led at Suffolk University’s Sawyer Business School, where our students became the research participants helping test whether games can actually change the way people think about leadership, business, and sustainability.

The study, titled Teaching Sustainability One Card at a Time, explored how an interactive tabletop game I created, the Sustainability Lens Game, could help students better connect sustainability concepts to real-world business decisions. More than 50 Suffolk business students participated in the research, which examined whether storytelling, teamwork, and fast-paced gameplay could increase students’ motivation, empathy, and sense of responsibility around environmental and social challenges.

Sustainability is one of the most pressing challenges facing today’s business leaders, but it can be tough to teach. It involves constant tradeoffs, long-term thinking, and decisions that ripple across people, communities, and the environment. Even students who care about sustainability often feel unsure of where to begin or how to apply it in real business settings. Traditional lectures and case studies do not always bridge that gap between abstract concepts and the everyday decision-making that entrepreneurs and managers face. That is where games can come in.

I designed the Sustainability Lens Game to help students move beyond simply talking about sustainability and actually practice making sustainable business decisions in real time. During the game, students worked in teams to redesign an ordinary business, such as a lemonade stand or dog-walking service, using sustainability “coin cards,” United Nations Sustainable Development Goals (SDGs), and the Business Model Canvas, a tool entrepreneurs use to build companies. The game includes 64 coin cards, which are mini sustainability solutions vetted for their impact and practicality, and players match these with the 17 SDGs across the nine sections of the Business Model Canvas. When you account for every possible combination, there are 9,792 different sustainability solution pathways teams can explore. These tools were built from my 25 years of developing and researching sustainable businesses both as a practitioner and an academic, including a Fulbright research study and three published books.

The game itself was not a typical classroom activity. Students worked in teams to redesign businesses like lemonade stands and dog-walking companies into more sustainable ventures. To play, participants quickly combined random sustainability challenges and solutions into creative business ideas while explaining their thinking through storytelling and teamwork. Players had only two minutes per turn to come up with creative solutions, forcing teams to think quickly, collaborate, and improvise. The game also included an AI assistant I built called Sustainability Sam, which helped facilitate gameplay, kept track of responses, and generated end-of-game summaries, SWOT analyses, and elevator pitches for each team’s new sustainability-enhanced enterprise. Sam helped capture what I think of as the “aha moment” in sustainability leadership, where players move from imagining what their business could be to actually seeing concrete next steps for making it happen.

The game matters because sustainability can often feel abstract or overwhelming in the classroom, but the fast-paced, hands-on format helps students see how environmental and social issues connect directly to marketing, operations, finance, and leadership decisions. As I watched the gameplays unfold, it became less about winning and more about solving problems together. Even though one player earned the most points each round, the whole team gained a vetted sustainability plan for their enterprise. Everyone had a chance to lead and contribute equally. The two-minute timer kept the energy high, but it created a sense of urgency with time itself rather than competition between teammates. Patterns of creative responses began to emerge across groups, things like donating to local causes, providing branded refills, offering carbon-free delivery options, and building partnerships with community organizations.

To test how context shaped the learning experience, we ran three different versions of the study. Some student groups heard a personal story about marginalization and sustainability challenges before playing. Others participated in debrief discussions afterward, while a third group simply played the game. We then compared how each experience affected students’ attitudes and responses.

The results surprised me. The strongest change among all students, no matter which group they were in, was an increased sense of personal responsibility toward sustainability issues. We also found gains in students’ motivation and intent to consider sustainability in future careers and business decisions. Interestingly, men and women responded differently. Men showed stronger gains in responsibility and intent to work in sustainability, while women, who entered with higher baseline scores across most measures, demonstrated the largest increase in motivation. This suggests that for some students the game acts as a catalyst for new identity formation, while for others it deepens and consolidates existing commitments.

Perhaps most interesting: storytelling mattered. Students who heard a personal story before gameplay showed stronger increases in responsibility and collaboration than the other groups. The experience helped students feel a stronger personal responsibility toward sustainability and encouraged them to think more seriously about how they might build businesses that create positive impact in the future. I concluded that storytelling helped students emotionally connect with sustainability issues before they began problem-solving, and that narrative priming appears to activate a more caring and relational mindset that carries into applied problem-solving. Students in the story group also referenced human and community dimensions of sustainability, things like fair labor, inclusion, and access, more often than students in the other two groups. The story seemed to anchor the gameplay in something personal, making abstract sustainability challenges feel emotionally real.

One unexpected observation came from the debrief group. While we expected the structured reflection session afterward to generate deeper insights, students in that group seemed to have already done much of their reflective processing during gameplay itself. By the time they reached the debrief, they appeared to be cognitively saturated. This was a useful finding on its own. It suggests that experiential games may already build reflection into the gameplay, especially when storytelling and collaboration are part of the design.

I recently presented the project at the Board Game Academics (BGA) annual conference at the Strong Museum in Rochester, New York. The presentation addressed Design, Systems, and Transformative Play and focused on sustainability education and experiential learning, where it drew attention for combining analog games, AI tools, entrepreneurship, and leadership development in one classroom experience. A full academic paper will be published later this summer in the Board Game Academics Journal and contributes to growing research on how experiential learning and game-based education can prepare future leaders to tackle complex global challenges.

For Suffolk students, though, the biggest takeaway may be simpler: sometimes the best learning happens when the classroom feels a little more like play.

Disclaimer

The content published in Nummus is for informational and educational purposes only and does not constitute financial, investment, legal, or professional advice. The views expressed in this article are those of the author and do not represent the views of Nummus or its editors. Readers should not rely on any content published in Nummus as a basis for making financial or investment decisions and are encouraged to consult a qualified financial advisor before doing so.

“I like trains. I like their rhythm, and I like the freedom of being suspended between two places, all anxieties of purpose taken care of: for this moment I know where I am going.”

— Anna Funder, Stasiland: Stories from Behind the Berlin Wall

Who needs public transport? What does a metropolitan without public transportation look like?

Why would anyone care about public transport? It can’t be that important. Up until my first year of college, I didn’t realize why people wanted more public transport. I thought that cars were enough. I would go into Boston maybe a few times a year for short necessary errands in a car. Everything changed when I started to go to college. For a few bucks I could get from one part of Boston to another within minutes. I found beauty in millions of people sharing a fixed system of vehicles getting around a dense bordered land to meet their friends; to pick up their children; to go on an adventure; to meet someone you were destined to meet. What I thought was something detestable and disgusting as a child became a beautiful and necessary chaos. If a city’s people are its blood, then the subway is its heart.

What does a metropolitan without public transportation look like?

I can’t even imagine Boston or New York without its transportation. It became so integrated with the identity of the city that taking it away would be to rip away a man’s skeleton. But if we had to imagine it, what would daily life be like? What would the economic impacts be? How would rent and land value change?

Public transport doesn’t just move people; it enlarges the labor radius of a city. A worker who is outside of the urban core of a city can still reliably participate in its economy so long as trains and buses connect them from residential corridors to commercial centers. Without that, employers would have to draw from a smaller employment pool, and prospective workers would also have less potential employment diversity.

The premium on housing and real estate near or on public transportation lines exists because the cost of movement decreases along with the time spent on getting from point A to point B. A joint National Association of Realtors and APTA study found that in seven U.S. regions, households in transit-rich areas were more likely to live car-light or car-free and spent about $2,500 to $4,400 less per year on transportation. Getting around using a thorough system will almost always be faster to use than a personal vehicle. The Metropolitan Planning Council of Chicago found that sales prices and asking rents were found to be 30% higher in areas closer to rail transit. The average commercial property in rail station areas is 16% more expensive than commercial properties away from transit. A location near a station gives residents and businesses something scarce in modern cities: predictable movement. In dense metropolitan economies, predictability often matters more than distance. People may complain about public transit politically, but they pay premiums for access to it.

According to abettercity.org if the MBTA system did not exist the city would need 2300 additional lane miles of road and 400,000 new parking spots. Without that new development congestion would become a constant living breathing organism occurring at all times of the day and night. Streets would have to absorb what rail currently compresses underground. A single subway train can remove hundreds of cars from a road network in minutes. Almost 1,000,000 people’s daily commute would be disrupted in Boston. More land would be sacrificed to parking structures, wider roads, loading zones, and slower pedestrian movement. Every aspect of the city would become something unrecognizable.

“A developed country is not a place where the poor have cars. It’s where the rich use public transportation.”

— Gustavo Petro

What is wrong with American public transportation right now?

There are many issues with American public transportation systems, but they can be understood through three recurring problems: cost disease, weak accountability, and ridership inefficiency.

American transportation networks burn through cash and then complain about underfunding while still asking for more without the rider experience improving. Labor has become the heaviest burden upon these networks, and the inefficiency is difficult to ignore when placed beside international systems. According to its 2025 Integrated Report, the Tokyo Metro transported 2.49 billion passengers in FY2025 while operating with just 11,328 employees, and doing so at a 21.3% operating income margin while actively constructing new lines.

By contrast, the Chicago Transit Authority served 338 million riders in 2025 across over 1,500 bus route miles and 224 miles of rail track while employing 10,869 workers, a staffing level that Tokyo Metro nearly matches while moving roughly seven times as many people. Meanwhile, Transport for London carried over 570 million journeys on the Elizabeth line alone in 2024/25, making it the busiest single railway in the UK, while continuing to expand its network. RATP in Paris served over 3.1 billion trips in 2024 while actively building new metro extensions.

This pattern repeats across nearly every major American system. Even where staffing totals appear similar internationally, each worker abroad tends to move far more people through the network each year. To fix this problem would be a fight with the transportation labor unions. But even France, with their massive union revolts, still manages to serve a significantly greater number of people with lower labor costs, higher efficiency and cleanliness while continuing to build more and upkeep their existing lines.

According to McKinsey, from 2002 to 2022 operational expenditures at US transit agencies grew by 50 percent while the actual hours of service provided grew by only 8 percent, costs rising at over six times the rate of output. The Federal Transit Administration reports that in 2024, US transit agencies collectively required over $55 billion in operating subsidies while still carrying fewer riders than in 2019. Washington Metro, New York’s MTA, and NJ Transit, which carries nearly 12,000 employees against a structural deficit approaching $1 billion, all reflect systems where labor costs consume revenue before ridership can hope to replenish it. Philadelphia’s SEPTA was forced to approve a 45% service cut and a 21.5% fare increase in June 2025 to fill a $213 million recurring deficit.

The wage burden amplifies the imbalance further. The Empire Center reports that MTA employees collected an average pay of $98,892 in 2024, a figure 47 percent above the US average and 80 percent above the US median salary, with overtime alone accounting for 17 percent of total payroll. Higher wages alone are not proof of waste, but when paired with weak productivity they create operating structures with no sustainable path forward.

I want to shift your attention to as far back as 2013, where a sobering pattern was already clear. A Bloomberg review of major U.S. systems showed that even some of the country’s biggest rail networks were still losing roughly a dollar per trip, while weaker systems were losing more than $5 per ride. While agencies such as Tokyo Metro, Taipei Metro, and several European operators sustain positive or near break-even margins over long periods, most major American agencies remain deeply negative even before major capital expansion is considered. Boston, Chicago, Philadelphia, San Francisco, and Washington all operate with persistent deficits that have become a standard with no change in sight.

The weak accountability becomes clear from the deficits becoming expectations every year. There is no financial pressure to make difficult decisions such as mass firing and a full internal audit. Federal support is assumed to come through against the losses that are constant. Unlike other transport systems that must justify expansion through projected returns and a strong balance sheet, many American agencies face little internal consequence when costs continue to rise.

In New York, this problem has repeatedly surfaced through investigations into overtime abuse, payroll inflation, fraud and embezzlement within the Metropolitan Transportation Authority. In one 2025 MTA Inspector General report, a station agent at 59th Street/5th Avenue was captured on surveillance video taking cash from riders, letting them through the turnstile, and pocketing the money; the report documented four suspicious transactions and noted that the employee retired during the investigation. Audits have shown workers receiving extraordinary overtime payments, supervisors approving excessive hours, and maintenance work being billed without equivalent visible progress in service delivery. In several cases, overtime earnings pushed individual compensation far beyond already high base salaries, yet these findings rarely go punished. In another 2025 incident the MTA Inspector General uncovered a broader fraud operation within the Long Island Rail Road where employees used cloned identification cards and fraudulent timekeeping records to clock each other in and out while absent from work. Investigators found duplicate cards being used across multiple facilities, including Ronkonkoma and Hillside, allowing employees to be paid for hours they did not work. The report described it not as isolated abuse but as a pattern spread across several locations. Earlier federal prosecutions exposed another form of abuse: senior MTA and Long Island Rail Road workers claimed overtime hours that prosecutors argued were physically impossible, with some reporting hundreds of overtime hours while attending outside activities, including bowling leagues, during the same periods they were supposedly working. One employee earned roughly $461,000 in a single year, far above his base salary, largely through overtime claims later challenged as fraudulent.

When no serious punishment follows inefficiency, it becomes tolerable and easier to repeat. A transit agency will remain underperforming for years while still receiving emergency cash injections because its collapse is politically unacceptable. Ironically the only way to fix the system would be with an iron fist and a willingness to let it fail. It’s said that the dead bird under the nest never learned to fly; American transit systems must be thrown out of the nest and forced to fly or fail.

Ridership inefficiency is the final problem. American systems are not only expensive; they are expensive while moving fewer people per employee, per mile, and per operating dollar. The issue is therefore not simply that transit costs money. Every transit system costs money. The issue comes from the high costs not yielding any gains in output.

“Watch the costs and the profits will take care of themselves”

— Andrew Carnegie

Why should profit be the marker of success in public transport?

It all comes down to profit. The Taipei metro, Tokyo metro, Madrid metro and Paris RER all chase profit but have the best on time performance with the highest ridership. It is not an optional outcome to them; it is a discipline that is constantly upheld. This is directly in opposition to the American systems who claim that in order to keep a system alive, any cost must be accepted. Though there are other measures of success such as land value gains, environmental gains, an expansion of the labor market and reduced congestion, they all come down stream of the pursuit of profit. And that pursuit doesn’t mean the highest amount of monetary extraction from riders but rather forcing a positive relation between costs and output.

State support for systems is not inherently a bad thing. With the high costs of building new lines, network expansion, station remodeling and fleet upgrades coming into the fray, it is necessary for expansion. In Tokyo, major capital projects still require outside funding, but every expansion must be justified through projected ridership, long-term maintenance cost, and expected financial return. They are cut no slack. Financial viability must be demonstrated to secure any external funding. They also have to prove that they can cover the long-term maintenance and operating costs without subsidies. And even after all of that, the national government does not subsidize the entire cost of construction. The Tokyo Metro as an agency must come up with a part of the funding on their own, whether through profits, bonds or bank loans. If a project underperforms or overruns, the agency won’t get its money back and they must live with that. It is a brutal reality but one that has caused it to become one of the best systems globally. A profitable system isn’t one that never receives help but rather one that cannot hide its inefficiency behind the need to stay running for the good of the public.

In some cases there are lines that should exist even if they are not profitable: outer borough lines, social access routes, and low-income corridors. These lift up a city by providing equal and complete access. But it should be an exception rather than the standard. And by doing so, it is possible that in the long term the growth and economic activity caused because of the access can make those lines profitable, if only by a single cent.

Why do international metro systems work better?

To understand why international metro systems are working better than our domestic ones we have to look at what their systems are doing right.

Tokyo metro is not only setting financial goals but beating their expectations while still building new lines. In its mid-term management plan, Tokyo Metro explicitly sets capital-efficiency targets, including ROE, and ties profitability not only to the rail business but also to real-estate and station-area development. Along with this the private rail companies, JR East and JR West are also expanding through the property plus model. This is where rail from farther away is connected directly to retail and employment hubs built into the station including shopping centers, office buildings, and food/restaurant halls. The value that is created from passenger movement is not left to escape. It is cultivated to allow for new ways to profit for the private rail companies in order to offer even more service.

The Madrid metro shows us a different angle to profit: spending less. They display superb cost control without sacrificing the usefulness of the network. The system avoids excess architectural construction and hyperfocus’s on throughput and simplicity.

The Moscow metro offers another model where high-capacity movement exists alongside strong centralized planning. Its stations are among the busiest in the world, trains arrive at extremely short intervals, and the system is designed around moving very large passenger volumes continuously. What I want to point out here is the beauty of the stations. It has been said that walking through their stations feels like walking through a museum. I have always held the contention that even in utilitarian objects, beauty should not be forgotten. Beauty inspires the people of a city; of a nation. A dull, muted, modern construction may serve its purpose, but it will not be revered as a thing of beauty for generations to come. Even if one day the utility of the Moscow Metro ends, it will not be torn down because it would become an artifact to treasure and preserve. I cannot say the same for the concrete tunnels of other networks.

In Paris, the public transportation is thorough and integrated with a unison of buses, trams, subway and commuter rail networks. As one of the international systems I have personally used, I found it to be clean, and quick. Suburban connections allowed me to efficiently make my way into the city. Just because a subway itself is dense doesn’t mean bus routes and dedicated tram routes should not be developed. Trams can even run along similar routes above ground as the trains underneath because they serve different purposes. Underground heavy rail leaves you slightly disconnected from the environment above you but for short distances Trams feel like an extension of walking where you can hop on and off, going from one street to another.

“I’m not sure he’s wrong about automobiles,” he said. “With all their speed forward they may be a step backward in civilization -- that is, in spiritual civilization. It may be that they will not add to the beauty of the world, nor to the life of men’s souls.”

— Booth Tarkington, The Magnificent Ambersons

Why did America choose roads?

The weakness in American public transport was formed through a century of policy decisions that made roads simple to fund, easy to expand and politically easier to defend. Car ownership and the picket fence was sold as the American dream. Materialism and individualism spread and mutated causing what we have now: unwalkable urban sprawl and endless asphalt.

The decisive shift ensued with highways becoming a federal priority. The Federal Aid Highway Act of 1956 committed massive national resources to interstate road construction. Roads were built so fast that city transit agencies couldn’t keep up. The political benefits came from promised construction jobs, suburban growth, military mobility, and immediate public symbolism. A highway could be opened, photographed, named, and politically claimed in ways a maintenance budget for rail couldn’t.

Suburbanization also changed daily life for Americans. Cities sprawled out further and further away from metropolitans. When they did so, not having a car wasn’t an option. It became a necessary part of movement and also a sign of American achievement. Low-density neighborhoods, separated commercial zones, and expanding residential developments made rail less convenient unless it had already been built first. Once suburbs spread beyond older rail corridors, roads became the default infrastructure because they adapted more easily to dispersed settlement.

This shift was reinforced by powerful industrial interests. Automobile manufacturers, oil companies, tire producers, and road construction firms all benefited from a transportation system where each household depended on private vehicle ownership. The more cars were sold, the more Americans drove, the more roads required expansion, and the more fuel was consumed. Federal transportation funding increasingly reflected this bias, with vast long-term commitments directed toward highways while urban transit systems often depended on fragmented municipal budgets and delayed federal assistance.

Before this transition most American cities had dense webs of streetcars. From about 1890 to 1930, streetcar suburbs spread across the United States, and by 1907 the country had more than 34,000 miles of electric streetcar track. They were electric rail vehicles running through city streets connecting neighborhoods to commercial districts. As cars running through the cities increased, public opinion on them changed from being useful to being a nuisance for drivers. Streetcars became vulnerable as the roads of cities were shifted to serve cars. The tracks would occupy valuable road space. The mixed traffic would cause more congestion and increase commute times. The maintenance cost rose but municipal governments delayed reinvestment. As Governing put it, the rise and fall of the streetcar suburb is partly the story of how government dollars, or the lack of them, reshape urban planning and housing development. The streetcars were left to deteriorate and fell into such bad shape it became more optimal to rip it all out and dispose of them than to fix the system. They were many times replaced by bus service which had low short-term costs and a greater flexibility, but the systems were not equal. There were tradeoffs, and what has now transformed into BRT (Bus Rapid Transit) systems have their own issues but that is for another time.

When roads were widened, intersections redesigned, and parking expanded, the street itself was gradually redefined around cars rather than shared public movement. Social corners were destroyed. Natural footpaths and the chaos of the street was replaced with depersonalized metal hulls shooting down long straightaways. What disappeared was an entire way of city life.

What can we do now?

For public transportation in America to get better, it must first be forced through a period of failure that can no longer be hidden behind subsidies, excuses, and endless promises of future improvement. More money will not save systems that have forgotten how to use money well. Before new expansion, before ribbon cuttings, before another request for emergency funding, there must be a reckoning inside the institutions already running the networks. A cleansing is overdue.

A full internal audit should not be optional. Every overtime record, every delayed maintenance contract, every project paid for but unfinished, every fraudulent abuse of payroll must be dragged into daylight. Agencies that have treated annual deficits as normal should be forced to explain exactly where the money went and why the rider continues to tolerate dirtier stations, slower trains, and weaker service. Where abuse is found, people should lose jobs. Where fraud is proven, punishment should be severe enough that the next person thinks twice before trying it again.

The current management must also be overhauled. Those that have let disarray continue without any protest must be let go. Transit systems cannot keep operating through layers of committees where responsibility disappears the moment failure appears. Someone must hold direct authority, and that authority must come tied to consequences. If service collapses, if budgets are blown through, if projects stall for years, there should be no hiding place inside bureaucracy.

Current levels of employment are unacceptable and unnecessary. And the pay received for the work that is being done is much higher than can be sustained by an agency that hopes to be transparent and profitable. The unions that have heralded this unrealistic standard must be fought with and pushed out.

The truth is that some comforts will have to disappear. New contracts must be written around service to the rider and taxpayer. Fares may have to rise in order to fix what has been blatant neglect, but the new influx of cash would clearly have to result in a better experience for users of the system. Riders should not be asked to pay more into systems that still tolerate waste as routine.

Then comes rebuilding. Train cars and stations must be cleaned until they feel civilized again. The small things: broken lights, jammed doors, dirty floors and tracks, and graffiti that have not been taken care of must be fixed. Maintenance that should have happened years ago must finally be done. Railcars must run so reliably that riders stop checking schedules and proceed with a sense of confidence. Only once a strong and healthy balance sheet has been created, can expansion be allowed whether on new lines or new hiring but not both at the same time. This expansion would be to reconnect disconnected districts, build tram corridors above ground, and turn stations into places of commerce and beauty rather than dead, dirty, dilapidated concrete waiting rooms.

The most pragmatic lesson I learned during my master’s degree in finance was understanding forecasting as the development of a structured hypothesis to understand how a business functions.

This allowed me to deepen my comprehension and make corrections when reality began to deviate from my forecast.

Forecasting Provides a Structured Hypothesis

Financial models contain a structured hypothesis based on various assumptions made in developing the model:

• Revenue drivers growing rates, pricing power, or customer demand.

• Cost Behavior: Variable and fixed costs, or efficiency.

• Operating Conditions: The market is stable or competitive and the quality of execution.

When developing these assumptions, you will utilize historical data as presented to you, but they will remain static until the end of the forecast period. Markets can change, customers can change what they are currently purchasing and how they purchase things, and the execution of your business may not be as smooth as planned.

When your actual results do not match your forecast, this is not a failure; rather it is valuable data that provides you with information. The value of the information is lost when you attempt to defend or explain away the deviations from the original forecast. Professional FP&A teams utilize forecasting as a diagnostic tool rather than a scorecard.

What Variance Analysis Actually Does: From “What” to “Why”

Variance analysis provides valuable information regarding the variations of drivers from planned or expected results. Moving away from the simplistic concept of being “over or under budget”, variance analysis allows organizations to analyze the reasons for their results by answering the following questions:

1. What caused our results to vary from what we expected? Did volume, price, or product mix cause variance?

2. Did the cost structure or efficiency cause margins to vary from what we expected?

3. Did we miscalculate our assumptions, or did conditions change from what we expected?

By breaking down the variance analysis into its component parts, variance analysis provides forward-looking insight to assist with decision-making rather than simply providing insight into what has occurred.

A Picture is Worth a Thousand Words: The Variance Bridge

The value of driver-based variance analysis can be demonstrated with a visual representation. A waterfall or “bridge” chart will display the components of a single net variance, in ways that you would not be able to see from just looking at the net data.

For example, the total revenue variance of +$10 million may consist of the following components:

• +$15 million - Increase in price due to strategic pricing changes

• -$10 million - Decrease in volume due to lower than anticipated customer demand

• +$5 million - Increase in revenue due to a change in product mix

The use of a variance bridge can provide a clearer picture of why the variances occurred as opposed to simply reporting results. The use of a well-constructed bridge chart will provide the basis for discussion in the management meeting in addition to reporting results going back to the time frame being considered.

Illustrative FP&A Example Using Public Data from Microsoft

Microsoft’s public financial results, together with their management commentary, provide a good illustration of how variance analysis supports decision-making. Microsoft has reported continued revenue growth from fiscal periods recently concluded primarily driven by Cloud Services (Azure specifically); however, there has also been noted moderation in some of the core Enterprise & Discretionary IT expenditures. Therefore, the headline growth rate could have differed from the expectations during the initial phases of the growth of the company’s business or the realization of the headline growth through execution of its business strategy; rather, the headline growth rate did not match expectations due to changes in the drivers of the growth within the business.

A variance analysis perspective helps understand the drivers of revenue, as opposed to simply aggregating revenue:

1. Revenue Mix Driver Impact: The overall revenue growth from Cloud solutions (primarily Azure/Azure-based revenue) and AI-enabled solutions has made up for slower revenue growth (in accordance with quarterly expectations) in traditional Licensing solutions.

2. Demand Timing Driver Impact: The enterprise demand for IT-related expenditure has varied in response to the macroeconomic uncertainty within their current fiscal year.

3. Margin Stability Driver Impact: Cost discipline and economies of scale are helping to maintain operating margins, despite the recent downward shift in demand for IT-related expenditure (as previously mentioned).

Although public disclosures do not divulge the detailed internal variance bridges employed by FP&A teams it is clear from the reported trends that understanding the composition of growth provides more value than focusing on headline variances alone.

Variance analysis provides a framework through which to analyze deviations from forecasted growth. Variance analysis allows FP&A professionals to reframe outcomes in terms of changes in the underlying assumptions (assumptions related to customer behavior and revenue composition). This allows the finance team to improve model forecasting capabilities, to reweight growth drivers, and to direct the allocation of resources toward higher growth segments thereby reinforcing FP&A’s role as a strategic partner as opposed to merely providing reports.

This example is purely illustrative, utilizing Microsoft Corp.’s publicly available financial disclosures and commentary pertaining to earnings.

Management by Exception vs. Overreaction

Not all variances require management intervention. The principle of management by exception, which underlies the application of FP&A principles, emphasizes the need to focus resources on those variances that are:

• Material in size

• Recurring in nature

• Structural in cause

Effective finance teams assist leadership to differentiate:

• Signal vs. noise

• Short-term disruptive forces vs. longer-term trends

• Execution slip(s) vs. flawed assumptions

Practicing this discipline either prevents or mitigates reactive decision-making and fosters development of long-term strategies.

Seeking Insight to Execute: Three Questions Analysis

Variance Analysis ultimately has value to the degree to which the variance analysis leads to informed decisions. The most important aspect of effective FP&A reporting is that it turns numbers into actions through answering the three questions:

• What has changed? - factual driver variances

• Why has it changed? - market/customer/internal

• What are we to do? - forecast updates, resource shifts, strategic pivots

For example:

• What has changed? - Cloud business performing while licensing business forces

• Why has it changed? - customers have pushed back on non-mission critical IT projects

• What am I to do? - Reallocate sales enablement from traditional application licensing business to cloud-focused migration specialists and adjust short-term growth assumptions for application licensing.

When analysis links results to decision making, finance begins to play a strategic partner role versus a historical documentation role.

A Brief Nuance: When is a “Perfect” Forecast Useful?

The employee goals are not to be incorrect. In stable and predictable environments like regulated utilities or mature SaaS portfolios having low variance is expected and desired as high variance is an indicator of a business that is well understood.

Even in these types of environments, though, it is critical to state that low variance should be a conclusion reached from analysis, rather than an assumption made prior to analysis. Depending on the nature of changes that are occurring within the business, assuming low variance is more common is detrimental to effective management by agility.

Key Takeaways

A perfect forecast is a myth. An insightful variance analysis is a competitive advantage. There is far greater value in a forecast missing and having the ability to show the inherent reasons for the miss, than in a forecast that is accurate through luck and/or manipulation. This allows finance to claim a strategic position within the company, not through predicting the future but by building a company capable of learning from what is happening today.

Forecasting is not a “guessing game”, it is the structured process of hearing what your company is communicating to you about the business (current performance) on an ongoing basis.

Definitions

Forecasting - Estimating future financial results based on historical performance, coupled with many possible assumptions and reasonable estimates of current economic conditions. The data used to estimate future results creates a dynamic, continually evolving hypothesis based on updated, real-time information.

Variance Analysis - The process of evaluating actual results against budgeted or estimated results and quantifying and explaining the variance caused by the basic business drivers.

Management By Exception - A control methodology whereby management is focused on reporting any significant, meaningful variances from the company’s financial plan rather than reporting all routine fluctuations.

RFERENCES

CFA Institute. Financial Analysis Techniques: Forecasting and Planning.

Drury, C. Management and Cost Accounting. Cengage Learning.

Horngren, C. T., Datar, S. M., & Rajan, M. V. Cost Accounting: A Managerial Emphasis. Pearson Education.

Microsoft Corporation. Form 10-K and Quarterly Earnings Releases. U.S. Securities and Exchange

Commission. https://www.sec.gov/edgar/browse/?CIK=789019

Disclaimer

The content published in Nummus is for informational and educational purposes only and does not constitute financial, investment, legal, or professional advice. The views expressed in this article are those of the author and do not represent the views of Nummus or its editors. Readers should not rely on any content published in Nummus as a basis for making financial or investment decisions and are encouraged to consult a qualified financial advisor before doing so.

Fiscal Year 2025 turned out to be a rebirth for the entire pharmaceutical world, with the sector finally outperforming the broader market. Eli Lilly continued its historic run, becoming the first healthcare company ever to hit a trillion-dollar valuation with a 39% gain. The M&A market underwent a resurgence, posting over 100 billion in deal value, more than doubling 2024’s activity, according to RBC Capital Markets.

What is fascinating about the performance, however, is the outstanding Irony. The industry got hit with the lion’s share of tailwinds, and was shoved against the wall, but somehow the NYSE Arca Pharmaceutical Index emerged superior to the S&P 500.

Monday, April 14, 2025, the trump administration opened a section 232 investigation into how importing pharmaceuticals from other countries affects national security. Prior to this the president had explicitly mentioned numerous times how one of his core desires was to bring manufacturing back to the U.S.

The official ultimatum was a 100% duty on all imported branded pharmaceuticals, effective October 1, 2025. While this policy invoked a proliferating urgency by exempting only those firms already breaking ground on domestic plants, the industry’s response had already been reshoring for months, and that started with Eli Lilly back in February, announcing around $27 billion investment across four new domestic facilities. Impressive, was the velocity and scale of the reaction. By November, the sector had already pledged over $480 billion for new domestic manufacturing to secure its standing in the American market.

Strategic deals were struck to trade price cuts for regulatory certainty, with Pfizer’s inaugural agreement on September 30, 2025, setting the precedent for subsequent deals. List prices will be cut by an average of 50% and up to 85% across a substantial portion of its primary care treatments and certain specialty branded drugs, to ensure U.S. patients and Medicaid programs receive rates on par with the lowest prices paid in other developed economies.

Pfizer also committed to a $70 billion reshoring and R&D initiative, which is dedicated to expanding U.S. manufacturing facilities. In exchange, they secured a three-year grace period exempting its products from pharmaceutical tariffs.

By December 19, 2025, 14 of the world’s biggest drugmakers had finalized deals with the Trump administration, which include industry leaders such as Eli Lilly, Novo Nordisk, Amgen, Merck, and GSK, and mirror the framework established by Pfizer. Each company committed to “most-favored-nation” pricing for state Medicaid programs and offered discounts for direct-to-patient purchases via TrumpRx.gov.

Then came relief, and a culmination of a plan to rebalance the burden of drug prices. On December 1, 2025, the U.K. government promised to increase the net price they pay for patented drugs by 25% in exchange for the avoidance of tariffs.

In my view, this offers vital relief for the industry. Whether the massive return of manufacturing to U.S. soil is beneficial in the long run is a question for another time. The immediate fact is that regulatory uncertainty was erased, creating a situation where investors see companies delivering financially while still trading at attractive valuations.

One company managed to move the needle further than anyone else, which might come as a surprise, is none other than Johnson & Johnson. They led large-cap pharma with a 43% surge over 2025, finally breaking out after years of stagnation. That momentum has carried into 2026, with the stock climbing 54% over the last 12 months.

This was the result of years spent positioning for the future. While the rest of the industry was in the spotlight, they were busy reinforcing a foundation. Relentless discipline is a trait that has defined the company since its very first day, long before it was a giant.

Robert Wood Johnson in 1876 attended the World’s Fair in Philadelphia. It was there that he heard a lecture by Dr. Joseph Lister, the British surgeon who pioneered antiseptic surgery. At a time when surgeons often operated in their street clothes without washing their hands, Lister’s talk about using carbolic acid to kill bacteria was seen as a “radical” turning point that redefined Johnson’s entire career.

Inspired by Lister’s vision, Robert Wood Johnson partnered with his two brothers, James Wood Johnson and Edward Mead Johnson, founding the company in 1886. Operating out of a small former wallpaper factory in New Brunswick, New Jersey, they started with just 14 employees. Their mission was clear, to create the world’s first mass-produced, ready-to-use sterile surgical dressings and sutures. Before this, surgeons had to prepare their own dressings, which were often far from sterile, leading to pernicious outcomes. By 1887, Johnson & Johnson were at the forefront of innovation, manufacturing absorbent cotton, gauze, and bandages that were hermetically sealed to ensure they remained germ-free until the moment they reached the surgeon’s hands.

The company took on the role of educator as well, to ensure their innovations actually saved lives. In 1888, they published Modern Methods of Antiseptic Wound Treatment, a how-to guide that quickly became the standard text for sterile surgery worldwide. They distributed over 85,000 copies to doctors and pharmacists within months, essentially teaching the medical world how to “scrub in” and use sterile tools.

The path to Johnson & Johnson’s status as a global conglomerate was paved by a relentless, century-long strategy of acquiring specialized expertise and scaling it. This evolution from a medical supply startup into a diversified powerhouse was anchored by the 1959 acquisition of McNeil Laboratories and the 1961 purchase of Janssen Pharmaceutica. These weren’t just business deals; they were the catalysts for Johnson & Johnson’s entry into modern pharmacology.

By bringing in Dr. Paul Janssen, one of the 20th century’s most prolific innovators, Johnson & Johnson secured the intellectual property that would eventually form their Innovative Medicine pillar. This blueprint of buying into “high science” was repeated decades later with the 1999 acquisition of Centocor, which gave them the biotechnology foundation needed to dominate the immunology and oncology markets.

While they were building a pharmaceutical empire, they were simultaneously using acquisitions to redefine the surgical landscape, moving far beyond their original sterile bandages. The 1998 acquisition of DePuy and the 2012 deal for Synthes combined to create one of the world’s most comprehensive orthopedics business, effectively cornering the market on bone and joint repair.

Then entering into the future of surgery in 2019 with the acquisition of Auris Health, providing the robotic surgery platform that is now central to their MedTech identity. By consistently absorbing world class innovators, they ensure that their global footprint is at the absolute forefront of the industry.

I wanted to start with their history because it gives you a real picture of who Johnson & Johnson is at their core. In this industry, the moment a company loses sight of its identity, it starts to drift.

If you just looked at the stock price between January 2020 and the end of 2024, you might have thought they were standing still. The price saw a sustained swell in the middle of those years, but eventually, gains were erased, leaving investors right back where they started. But underneath, the company was everything but stagnant. They weren’t deviating from their identity; they were reclaiming it. Those five years were a period of intense preparation; a time spent shedding the parts of the business that didn’t fit anymore and priming the engine.

Joaquin Duato took the helm as CEO in January 2022 and immediately began drafting the blueprint for a leaner, more aggressive powerhouse. This regime change was officially codified during the Enterprise Business Review in December 2023. Duato noted that ringing the NYSE bell that morning was the “starting bell for the new Johnson & Johnson,” signaling a pivot away from diversification for its own sake and toward structural disaggregation.

On August 23, 2023, they finalized the separation of Kenvue, the company’s consumer health business. Of course, you have to recognize the legacy they will leave behind, but it is not what made them who they are. They dominated that space and introduced inaugural products, but they redrew the contours of the industry and are now focused on doing it again. Duato cleared the path for what he termed an “exclusivity of focus.” He articulated the shift clearly:

“We have entered a new era, one that is exclusively focused on medical technology and innovative pharmaceuticals... with the separation of our consumer business, we have a stronger growth and margin profile, and we are more focused and more agile.”

This wasn’t merely a strategic slimming down; it was a deliberate restructuring. Through a massive exchange offer, Johnson & Johnson accepted over 190 million shares of its own common stock in exchange for its stake in Kenvue. This move drastically reduced its outstanding share count, effectively retiring billions in equity.

This new era was solidified in September 2023 with a refreshed brand identity that united its diverse segments under a modernized Johnson & Johnson name, officially retiring the Janssen pharmaceutical brand. Numerous acquisitions followed the rebranding, which began with a $16.6 billion acquisition of heart pump maker Abiomed in late 2022.

In April 2025, Johnson & Johnson completed a $14.6 billion acquisition of Intra-Cellular Therapies to secure the blockbuster drug CAPLYTA. Finally, a $13.1 billion purchase of Shockwave Medical. Their technology, known as intravascular lithotripsy (IVL), uses sonic pressure waves to safely crack the stubborn calcium buildup that blocks blood flow, effectively using sound to do what surgeons used to have to do with force.

The full 2025 results outlined the financial reality of this new structure, where cardiovascular sales, now including the Abiomed and Shockwave integrations, surged nearly 16% to top $8.9 billion. While other units saw modest growth, this segment became the only business unit to grow by double digits, providing the momentum for Duato’s catapult year to materialize into a 2030 pipeline expected to deliver more than 10 assets with over $5 billion each in peak annual sales.

With plans already in motion to spin out the orthopedics business by mid-2027, the company is swapping its slower-moving legacy parts for a future defined by high-margin technology like the OTTAVA robotic surgical system, which was recently submitted to the FDA for review. This shift has set a new baseline for the company’s scale, with 2026 guidance now projecting reported sales to cross the historic $100 billion milestone for the first time in its 140-year history.

Willingness to embrace the radical is the fundamental composition of the firm. At a time when the denizens of the medical community dismissed antiseptic theory as an unnecessary burden, Robert Wood Johnson was amenable to a vision that others lacked the foresight to see. Johnson & Johnson’s stark restructuring toward MedTech and Innovative Medicine provides a revitalized optimism for the long-term trajectory of the company, but most importantly, places them at the forefront of innovation again.

Disclaimer

The content published in Nummus is for informational and educational purposes only and does not constitute financial, investment, legal, or professional advice. The views expressed in this article are those of the author and do not represent the views of Nummus or its editors. Readers should not rely on any content published in Nummus as a basis for making financial or investment decisions and are encouraged to consult a qualified financial advisor before doing so.

In an era defined by an overflow of real-time data, investment research often suffers from a paradox of choice. We have more technical indicators than ever, yet our fundamental insight has rarely felt more diluted. There is a tendency to over-index on granular ratios and immediate price action, often at the expense of recognizing paradigmatic shifts, the moments when an industry fundamentally breaks from its past.

We are witnessing massive structural realignment in the soft tissue robotic surgery market in real time. For over two decades, one pioneer defined this sector. Now the one-company era is rapidly dissolving into a multi-polar competitive landscape.

To properly understand the magnitude of this shift, I want to revisit where it all started. The concept of robotic surgery has its roots in military research aimed at solving a critical problem, allowing surgeons to operate on wounded soldiers remotely on the battlefield. The U.S. Defense Advanced Projects Agency (DARPA) funded research at SRI International in the late 1980s to create a telepresence system, which became the prototype for modern surgical robotics. While early commercial systems like the PUMA 560 (1985) and the voice-controlled AESOP (1994) introduced robotics to the operating room, the true inflection point occurred when the military’s core technology was commercialized. Recognizing the immense potential of the SRI system, Dr. Federic Moll partnered with John Freund and Robert Younge to acquire intellectual property, leading to the founding of Intuitive Surgical in 1995.

The founders rapidly developed their signature product, the Da Vinci Surgical System, which received U.S. FDA approval in 2000 for general laparoscopic procedures. This marked the birth of the modern surgical robotics market. Intuitive cemented its monopoly in 2003 by merging with its primary rival, Computer Motion, Inc. (makers of the ZEUS robotic system), effectively eliminating direct competition. Having established Da Vinci as the standard of care in soft tissue specialties, Intuitive Surgical has maintained undisputed global market leadership for more than two decades.

Intuitive’s journey to dominance paved the way for robotic surgery to become an integral part of modern surgical practice. If you look back to 1995, when the company was founded, the idea that a surgeon could operate from a console and feel the push and pull of tissue with such high fidelity was a distant fantasy. Today, robotic surgery has become a standard practice, adopted by leading hospitals and medical schools globally. This monumental shift is visible on the company’s vast scale. Intuitive now has an installed base of over 10,600 robotic systems across the globe, with over 17 million procedures performed to date.

What I find so remarkable is how far they have pushed the limits from that original military vision. Intuitive’s latest system, the Da Vinci 5, represents a staggering leap forward, delivering 10,000 times the computing power of its predecessor. It introduces revolutionary Force Feedback technology (also called haptic feedback) that finally allows the surgeon to feel subtle resistance, push, and pull forces on tissue through the console controls. This ability to deliver “enhanced surgical senses” is not just about feeling; it translates into tangible patient benefits, resulting in up to 43% less force exerted on tissue in preclinical trials. Furthermore, this computational muscle powers advanced digital features, giving surgeons real-time surgical sets and data analytics, such as the Force Gauge (a speedometer-like indicator of applied force), truly setting the standard for the future of surgery.

Hospitals are performing more robotic surgeries than ever, UCSF Health alone passed 15,000 robotic procedures in 2024.Via Christi hospitals in Kansas reported having performed more than 25,000 robotic‑assisted surgeries across their network as of October 2025, but even with all that momentum, the financial weight of robotic programs has not gone away.

These systems still come with multi-million-dollar price tags, and hospitals today are being forced to think more carefully about every dollar they spend, especially as the reimbursement landscape continues to tighten. So, you end up with this strange moment where the demand for robotics is surging, the technology is accelerating, and yet the economic pressures are becoming harder to ignore. This is where I personally see a huge shift coming, where competitors are going to experience a level of demand they have never seen before. Hospitals need more affordable options, promising new systems are finally making real progress in the U.S. and abroad, and it feels like we are just at the very beginning of what could be a major reshaping of the market.

The company I want to address first is SS Innovations (NASDAQ: SSII) as it brings the story into a full circle. Remember when I mentioned Dr. Frederic Moll, the co-founder of Intuitive Surgical, and the person widely regarded as the father of surgical robotics? He now serves as Vice-Chairman of SS Innovations and holds approximately 10% of the company.

What draws me the most is what they are trying to accomplish. The company is led by Chairman and CEO Dr. Sudhir Srivastava, a pioneering robotic cardiac surgeon who has performed and trained teams in many of the world’s first robotic heart procedures. Srivastava’s approach is not about replicating Intuitive Surgical’s platform, but about fundamentally rethinking how robotic systems are designed and deployed to improve access and usability. As quoted by MedTech Dive, Srivastava said, “My whole goal was always not to copy. Although [Intuitive] created a wonderful technology, there are always opportunities to make things better. Newer ways are being discovered, and we can use our thought processes to advance it further.”

Since their NASDAQ debut on April 25th 2025, the momentum behind the company has only intensified. They have officially submitted their 510(k) application on December 5, 2025, putting them on track for potential U.S. clearance as early as mid-2026. As of December 31, 2025, their core robotic system, SSi Mantra already has 168 installed across 10 countries, with more than 7,800 procedures performed. The main distinction is their presence in areas where other systems have not yet become a major factor, specifically cardiac and telesurgery. They have already recorded 400 cardiac cases and 120 telesurgeries.

I want to pause right here because what I just mentioned is nothing short of revolutionary. If you aren’t familiar with telesurgery, it is the ability for a surgeon to operate on a patient miles, or even continents, away via a robotic interface and a high-speed data connection. This concept has been a dream since the 2001 “Lindbergh Operation,” but it is only now becoming a clinical reality. SS Innovations is not the only company with regulatory approval in this field. MicroPort MedBot has received NMPA approval in China and completed nearly 400 cases within its domestic network. However, SS Innovations has uniquely expanded the scope of the technology by successfully performing the world’s first remote cardiac surgeries, a specialty requiring extreme precision.

What truly sets them apart is the SSi Mantra Tele Surgeon Console (TSC), the world’s first portable tele-surgeon console, that allows surgeons to operate entirely outside of a traditional hospital and OR setting. By utilizing lightweight 3D glasses and magnetic controls, specialists can now provide life-saving care from a private office or even their own residence, as demonstrated by their CEO’s recent 185-mile bypass surgery. SS Innovations made history when they officially received regulatory approval for the telesurgery and teleproctoring capabilities of the SSi Mantra from India’s CDSCO back on December 10, 2024. While the industry has been evolving for years, if they secure FDA approval for telesurgery applications, it will be monumental, opening the floodgates for remote, expert-led care to scale globally.

Medtronic, (NYSE: MDT) a MedTech conglomerate based out of Dublin, Ireland has recently made a huge regulatory stride. whose timing in the market says a lot about where this field is headed. When a company generating over $33 billion in annual revenue leans further into robotics, there is a level of deep-rooted integrity and scale that smaller competitors simply cannot replicate. Medtronic began rolling out its Hugo™ robotic system in 2021, steadily building an international presence while preparing for its eventual move into the U.S. market. In just a few years, Hugo secured clearances in more than 30 countries, creating a broad clinical foundation long before crossing into the United States.

On December 3, 2025, the FDA cleared Medtronic’s Hugo (RAS) for urologic procedures. Hospitals now have access to a robotic platform backed by one of the world’s most established medical technology companies. Hugo’s modular architecture and deep integration with Medtronic’s Touch Surgery™ digital ecosystem reinforce how serious of a competitor they are.

Personally, I do not believe investors are fully pricing in how significant this U.S. clearance is. For a company of Medtronic’s size and reputation, reaching this milestone marks a major achievement, and it sets the stage for an adoption curve that is going to be fascinating to watch over the next decade.

Johnson & Johnson (NYSE: JNJ) is also preparing an entrance into the market with the OTTAVA™ Robotic Surgical System, though it has not yet been commercialized. The company recently submitted the system to the U.S. Food and Drug Administration (FDA) for De Novo classification, seeking approval for multiple upper abdominal general surgery procedures, including gastric bypass, gastric sleeve, small bowel resection, and hiatal hernia repair. They have also reached a key milestone by completing its first clinical trial cases with the OTTAVA™ system on April 14, 2025, marking its initial use in real-world surgical procedures.

OTTAVA is designed as a multi-specialty soft-tissue platform capable of handling complex procedures across the upper abdomen. Its unified architecture and integration with Ethicon surgical instruments provide surgeons with familiar tools for minimally invasive procedures, potentially helping to accelerate adoption.

Just like Medtronic, this is another juggernaut of a corporation tapping into the soft-tissue robotics market. Although the companies I’ve highlighted so far are already commercialized and have multiple systems deployed in hospitals, Johnson & Johnson’s scale, resources, and expertise, in my view, solidifies that they will make significant strides once they receive authorization.

If you have noticed, the first three companies I have highlighted all have something in common besides being in the same industry, they are all publicly traded. In contrast, CMR Surgical is a fierce competitor in the private markets. Headquartered in Cambridge, United Kingdom, they have already achieved the milestone of becoming the second most adopted soft-tissue robotic system globally, positioned only behind Intuitive Surgical. Across all CMR’s robotic platforms, they have completed over 40,000 procedures, building a robust foundation.

They have made significant regulatory strides in the U.S. recently; after clearing the initial hurdle with a De Novo authorization in late 2024, they secured a critical FDA 510(k) clearance for the Versius Plus on December 16, 2025.

Back on April 2, 2025, CMR closed a $200 million funding round supported by major backers including a substantial debt investment from Trinity Capital, which brought their total capital raised to approximately $1.4 billion. Given the recent momentum in the IPO markets, the next step could very well be a public offering.

Finally, another competitor in the private markets is Moon Surgical, headquartered in both Paris and San Francisco. Dr. Frederic Moll serves as the Chair of the Moon Surgical board in addition to his role at SS Innovations. His presence on the board serves as a massive endorsement of Moon’s vision to bring robotics to the 18.8 million annual procedures currently ignored by larger telerobotic systems.

The company has moved at a breakneck pace, receiving FDA clearance for the commercial version of its Maestro™ Robotic Surgery System in June 2024. Most recently, in March 2025, they reached a major industry milestone with the FDA clearance of ScoPilot™, the first AI-enhanced intraoperative capability to run natively on a surgical robotics platform.

Powered by NVIDIA Holoscan, this physical AI allows the laparoscope to automatically follow a surgeon’s instrument tip, a breakthrough that has already supported the treatment of over 1,100 patients across the U.S. and Europe. By utilizing real-time sensing to enhance surgeon autonomy and OR efficiency, Moon Surgical is positioning itself at the absolute forefront of the digital surgery revolution.

What to expect going forward is a complete departure from the status quo. For twenty years, the soft tissue robotic industry was a one-act play. Now, we are seeing a diverse cast of competitors, from established medical giants to specialized global firms, reimagining what these systems can do. The technology has reached a point where it is a standard of care for many specialties, however its full potential remains widely untapped. Growth Global Insights predicts the global surgical robotics market will surge to more than $66.46 billion by 2035.

Looking ahead to the next 5, 10, and 15 years, the investment potential here is as significant as any other corner of technology. This field is evolving into an essential global infrastructure. While I do not expect a radical crash in costs, the entry of more versatile players will naturally introduce more flexible financial models and a gradual downward pressure on the total cost of ownership. As these newer platforms refine their capabilities and lower the barrier to entry, they are not just fighting for existing market share, but the entire pie. We are going to see businesses that are currently building their foundations to scale into heavyweights in a fast-growing industry.

Disclaimer

The content published in Nummus is for informational and educational purposes only and does not constitute financial, investment, legal, or professional advice. The views expressed in this article are those of the author and do not represent the views of Nummus or its editors. Readers should not rely on any content published in Nummus as a basis for making financial or investment decisions and are encouraged to consult a qualified financial advisor before doing so.