2020: When You Could Raise Millions Over Zoom. And No One Cared If You Were Based in SF Anymore.

Q: What was the biggest news in the venture capital world in 2020?

The biggest news in venture capital in 2020/2021 by far was the ability for founders to raise millions of dollars or more just over Zoom — without ever meeting face-to-face.

Before Covid, 95%+ of VC investors required a face-to-face for any material sized investment. There have been some firms that made exceptions, folks investing from Europe etc. into the U.S. for example, but they were rare.

Since Covid, $1m-$10m VC rounds, and sometimes much bigger investments, are now routinely done without a face-to-face, or perhaps a quick walk-and-talk at the very end with masks on. The face-to-face, if it happens at all, happens at the end of the process, not multiple times starting from the beginning.

We did a deep dive with many top VCs on the topic here:

SaaStr New New Venture 2020

Not that it’s not all that simple, or all an improvement. Much of this money went to founders that (x) VCs had met already before Covid, (y) were second-time founders or otherwise known, and/or (z) had strong brands or traction already. There’s significant evidence that investing over Zoom benefits the privileged in many ways, and that’s a big negative.

But the fact that every top VC firm will invest over Zoom and not require a face-to-face anymore, at least not in many cases or until the end of a potential investment process … is the biggest change in years.

 

The second biggest news is the flattening of where start-ups are based. Since every start-up became distributed after Covid, exactly where your HQ was … no longer much mattered. The advantage of being HQ’d in SF was at least paused during Covid. VCs who just a year ago were very biased in favor of SF-based startups simply no longer care.

If this stays true after Covid, in the end this may be a bigger deal than raising millions over Zoom.  SF remains the home to 80% of public SaaS companies, that isn’t going to change for a while.  But where the next generation is based … already has.

Published on December 26, 2020

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