What VCs are Saying About Coronavirus and What Lies Ahead
The coronavirus is on everyone’s mind. In a state of uncertainty, one this is becoming clear; startups, founders, and the venture capital world need to prepare for what is around the corner.
No one knows what is next, we’ve collected what prominent investors and venture capitalists are predicting what is next and how founders can prepare for coronavirus.
Coronavirus: The Black Swan of 2020 — Sequoia Capital
Sequoia Capital is undoubtedly one of the leaders in the venture capital space. When they write a memo or share something with their portfolio companies it is heard around the VC world. The team at Sequoia recently shared the note they shared with their portfolio founders. The note focuses on finding sustainability and weathering the uncertainty.
“Having weathered every business downturn for nearly fifty years, we’ve learned an important lesson — nobody ever regrets making fast and decisive adjustments to changing circumstances. In downturns, revenue and cash levels always fall faster than expenses. In some ways, business mirrors biology. As Darwin surmised, those who survive “are not the strongest or the most intelligent, but the most adaptable to change.”
What I Expect in the Next Few Months in Startup Land — Tomasz Tunguz
Tomasz Tunguz is a Partner at Redpoint Venture. In his blog post, Tomasz shares what founders should expect to change over the coming months in relation to their growth rates and fundraising efforts.
“For startups, things will likely slow down. Longer sales cycles will be the leading indicator. At least, that’s my key metric for startup health over the next few months.
With travel curtailed, closing new customers will require selling over the phone/video – and it’s a bit harder to build trust, particularly for big deals over the phone. Bookings will be more volatile than in the past as a result. So, more pipeline is necessary to create consistency.”
Funding in the Time of Coronavirus — Mark Suster
Mark Suster is the Managing Partner at Upfront Ventures. In his blog post, Mark studies the last 11 years to share his thoughts on what will happen in the venture world over the next 2 years.
“If the public markets continue to decline and VC funding is affected, you can expect VCs to focus on their existing portfolio companies first.”
Semil Shah is the Founder and General Partner at Haystack Ventures. In his blog post, Semil collects his thoughts on the effects coronavirus will have on fundraising in 2020 and beyond.
“Zooming out a bit (sorry), investors may begin to segregate “fragile” versus “anti-fragile” companies, models, and categories.”
Hysteria and Complex Systems — Brad Feld
Brad Feld is a venture capitalist at Foundry Group. Brad takes a different approach compared to the other posts and thoughts shared above. Instead of having a “strong” opinion, Brad tries to share a “clear” opinion to convey how coronavirus is playing out as a complex system.
“When a large technology company in a city shuts down its offices, cancels all travel, and insists everyone works remotely from home, other large technology companies around the world and other companies in the city pay attention to this. Suddenly, there is a conversation going on everywhere that is the equivalent of “should we do the same thing?” The emotional cadence of this conversation is high, so companies over-index on trying to figure out the right answer, where there isn’t really one given the nature of a complex system.”
Chetan Puttagunta — General Partner at Benchmark
In a Tweet, Chetan Puttagunta, reminds founders that strong companies are still built during volatile times.
We at Benchmark are optimistic about the entrepreneurial spirit.
As early stage investors, 1/3 of our investments are the initial capital and the majority of our investments are pre-revenue.
Many of the best companies are built in volatile times.
We’re open for business.
— Chetan Puttagunta (@chetanp) March 9, 2020