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:
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.