The novel coronavirus is the Black Swan event of 2020. The stock market is volatile and businesses are facing impossible challenges. Though global economic turmoil is likely to continue into the foreseeable future, some investors are expecting movements in the market that could pay off long-term bets due to the pandemic.
The thinking is while some investors will play it safe, withdrawing from the market, competition will lessen. Danny Crichton told TechCrunch “It’s the VC (venture capital) equivalent of of buy (actually) low and sell high.” He explains that “Many investors can do more due diligence and there are a lot of companies being built that have great growth prospects and are going to survive this global pandemic.”
While startup founders are expected to take large valuation cuts (likely ranging between 20-30%), according to Crighton, he’s expecting investors will be open to VC investments as long as a company can map out a long-term success plan.
Like many of us, investors are working remotely to meet with startups. TechCrunch also reports how online meetings/ video calls are impacting deal-making and building portfolio diversity. Meetings may be different, but work is business as usual.
“In-person is always ideal, but video still allows to get a close-to-complete sense of the person in front of you—everything from facial expressions to body language to how they organize their deck,” said a founding partner of the W Fund Kate Brodock. “Making meaningful and informative connections through video is entirely possible.” Granted these is more applicable for the beginning talks of investing.
The world may be stopping for most of us and while the market may look bleak to some, investor funding is finding ways to turn a crisis into an opportunity. As the saying goes, strike while the iron is hot, and that iron is getting scalding.
Staff Writer, Allison Yano is an artist and writer based in LA. She holds a BFA in Applied Visual Arts and Minor in Writing from Oregon State University, and an MFA in Fine Art from Pratt Institute. Her waking hours are filled with an insatiable love of storytelling, science, and soy lattes.
