Q: Which VC firms are still reviewing fundable deals during the Covid-19 quarantine?
Almost every VC firm is reviewing deals. The question is what are they doing about them.
We did a deep dive on the topic with Byron Deeter of Bessemer Venture Partners and it’s a pretty incredible look at what’s happening in VC right now:
A few summary thoughts:
- A lot of time is still being taken up with “triage” on existing portfolios.
- Many bigger firms have “tapped the brakes” and at least made a decision to slow down their investing pace for now.
- Many bigger firms want to reserve capital for deals later in the year when valuations “reset” a bit. They feel (right or wrong) that they overpaid for deals in 2019 and early 2020 and a need to benefit from lower valuations later in 2020.
- Most VCs still need to meet face-to-face, for now, to do a deal.
- The deals you see in TechCrunch, etc. already happened before shelter-at-home, or at least were in process then, or at the very least, the VCs already knew the founders well.
- Cognitive overload for all of us.
- BUT, lots of Zoom meetings are still happening. In some cases, especially with newer partners and VCs, they may have more time now to do Zooms.
- AND, lots of angels and small seed funds have a history of investing over Zoom, have fresh capital, and the least triage to deal with.
Net net, assume everything just got (x) twice as hard, and (y) will take twice as long.
Send over more information. Send all the metrics. Don’t play games. Don’t ask to just meet “for coffee” over Zoom. Make every email, every interaction your very, very best pitch.
And at the margin, for now, it will be easier to pull off seed and small Series A investments. Especially small ones into low-burn, high-quality start-ups. Seed funds will rebound the fastest, and the checks are smaller, and they can take a bit more risk. And there are fewer valuation reset issues in seed.
These are confusing times. But the money is still there. A lot of it. Be patient, nail your numbers. And maybe don’t take being ghosted personally right now. It’s OK to follow up again in a few weeks.
VC Sentiment, Apr 8 2020:
If you are growing faster than before Covid-19, here is the term sheet just 1 page really simple
If you are shrinking, I feel for you
If you are growing but more slowly than before Covid-19, let's talk
and talk and talk and talk and talk and
— Jason ✨InItTogether✨ Lemkin (@jasonlk) April 8, 2020