How COVID-19 Changed The VC Investment Landscape
The global pandemic has brought a lot of unexpected changes in not only our lifestyle, but the business and investment strategies also. We soon discovered that it had turned into a massive global pandemic, which brought down entire industries such as travel and hospitality.
As tech entrepreneurs and investors, we are experiencing a great deal of uncertainty around where the market will go: Would customers be willing to pay for our products or services, how has COVID-19 affected them, and for how long? Came across a very interesting article about the pattern of investment in the affected countries in the world.
As expected, COVID-19 did hit the VC investment landscape. It slashed the number of VC rounds by around 44 percent in the U.S. The number of VC deals dropped from 483 in 2019 to 209 in March to June 2020. As expected, many venture capital firms are leaning towards a continued slowing down of activity. Whilst they are still on the lookout for interesting startups, they’re reducing the number of new investments, and intend to maintain this ‘new normal’ for the coming months.
As per Romain Lavault, “Most startups should expect a “new normal” with fewer rounds, more syndicated deals and probably more caution on valuations”.
So the whole point of this article is to throw some light on the ways a startup can cope up this situation. When it comes to presenting your business to a venture capital fund, it’s essential that you address the current crisis, and how your startup has pivoted, adjusted and re-mapped its growth strategy. As explained by Stan Laurent, Partner of Highland Europe: “Founders will need to explain very clearly how they’re responding to the new environment.”
In other words, when preparing your materials to present, make sure that you include a well-detailed plan that considers multiple scenarios and outcomes as the crisis progresses over the coming weeks and months. “For startups looking to raise in this landscape, having a strong product demo and a well thought through plan for growth during a downturn will be crucial to the funds and investors that remain active”, said Oliver Richards, Partner at MMC Ventures.
- source, an article from EU startups.