Q:  How is Venture Capital difference since Covid-19?

At first — and only briefly — things slowed way back. Portfolios in many cases were hit hard, with startups in travel, events, fitness, etc. hit hard, and VCs distracted with working out the issues in their portfolios:

But the slow down lasted, at best, 60 days:

  • First, Cloud stocks went on an unprecedented tear. As did Cloud revenues. Zoom, Slack, RingCentral, and more all took off as companies needed more of them to work from home:
  • Second, VCs adjusted to the new risks. Every fund, one way or another, got used to investing over Zoom. At first, funds invested in founders they already knew. That was easy. The next wave was adjusting and investing in founders they hadn’t met face-to-face. Some do “walk and talks” with masks at the end of a diligence process. F2F meetings are still happening — just fewer of them. Others just do a bit more people diligence than they used to. Even multi-billion dollar M&A deals were done primarily over Zoom:
  • Then, competition heated up. With stocks on a tear, and VCs more comfortable taking risk over Zoom — VCs could now invest faster than ever before. Weeks were shaved off the investing process, even for $100m+ checks. That meant more competition.

So for the best Cloud companies and start-ups … the ones growing faster than ever, and faster than before Covid-10 … this is the most heated and extreme VC environment in a long, long time.

But conversely, for the “almosts”… The startups that maybe need more time to really understand. The ones with good, but not great, metrics. Those are struggling now to get VC attention that perhaps they would have gotten pre-March 15.

SaaStr New New Venture 2020

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