ovid and related lockdowns may be the most disturbing action most of us have ever experienced. As a result, huge worldwide shifts are on the way. The OECD has predicted the worst recession in a century. However, expect much more than a recession to occur. Many firms have been affected, and there are clear winners and losers. As we move through the recovery process, we expect to see people rebuilding their lives and businesses reinventing themselves.
The coronavirus-induced instability isn't simply a threat to the new generation of wealthy, youthful founders-turned-investors. Experienced general partners, battle-hardened by disasters like the dot-com catastrophe and the global financial crisis, are re-evaluating their approach as well.
Even at high valuations, the latest venture investment playbook, post-pandemic, urges for a slower, more defensive approach, a striking change from years of furious deal-making. It will also redraw the boundaries around areas of chance, determining winners and losers in a world that has changed dramatically in the short term and has changed forever in certain aspects.
Part one of the Andrew Issacs Expert Office Hour talk will go through exactly how much COVID-19 has changed valuations. Isaacs has more than 15 years of expertise in healthcare M&A and startup fundraising, including roles at Evercore and Morgan Stanley. A few major points from his observations are listed below.
How your valuation influences a COVID pivot
If you're a creator who has shifted due to COVID, I hope you've talked to your team and board about the possibilities. You should have done your due research before pivoting your company, and you should be able to explain your decision to an investor. You can't simply inform them that there's a possibility. What chance do you think you've got? You can't simply tell investors that you pivoted because of a gut feeling.
Know that investors are also people
Remember that when you're raising funds, the people you're pitching for a job are also looking for work. They need to get anything approved by a committee. It's never just about whether people like or dislike your company. Consider how you could make an absolute rock star appear to be the one pitching your company to the committee.
To make the process quicker and adjust the odds in your favor, here are 9 tips:
1. Do the hard stuff first
Almost every company in our business has had to rethink its strategy and cut costs. This is the task you must do before considering funding. Even if you're growing quickly right now, investors want to know that you'll be able to handle the unknowns in the upcoming years.
2. Defining the value proposition clearly and the ROI for the customers
In this perspective, the most successful businesses are those that can demonstrate a positive return on investment to their client. If you haven't yet created an ROI calculator for your sales team, now is the moment.
Make it as specific as possible, and the more factual input you provide, the better. Clients can also be separated by their vertical or height. Clients can also be separated by their vertical or height. Using your imagination, but being able to demonstrate a 10x return on investment will be the key to success in the coming months.
3. Be truly concerned about the funds/angels that you approach
Investors are expected to make their decisions solely remotely in the current meaning of limited or non-existent travel (at least for the time being). It's tough for investors to evaluate firms and founding teams through video calls, just as it's difficult for you to do so.
The two aspects that can make this phase simpler are (1) if there were previous contacts in person before COVID and (2) if the investor has a thorough knowledge of your sector.
4. Share good news early, and bad news earlier.
There is no such thing as overcommunication right now, and hiding or delaying bad news is never a good idea. You automatically establish that degree of confidence when you show the investor that you are open, which calms both parties and puts them on the same page.
5. Be patient: it can take longer than normal to do so.
We live in a constantly changing world. Because alliances are more conservative in their resource distribution, they present more questions. Just keep in mind that in some areas of due diligence, you'll have to dig a little deeper than you would in a different atmosphere. Don't let yourself down.
The current situation is unlikely to improve very soon, but don't lose faith in the process or forget that investors are looking for the next wave of iconic SaaS businesses to emerge from the crisis.
6. Need Passing
Despite the fact that specialists believe this is unlikely to be the last pandemic, we realize that demand for particular goods and services has increased, but the increase is likely to be temporary. Contact tracing technology and other supply-restricted products, such as PPEs, ventilators, and hand sanitizers, are examples of these products.
7. The New Normal
COVID-19 worsened the fall of industries in this group, which were already facing difficulties due to existing patterns. We expect our old truth' to return to these businesses and industries in the majority of cases, although not at the same levels as before COVID-19. "Instead, current organizations in these areas will return to a lower baseline that will become the new standard if they struggle to change and accept innovation."
8. Moving Forward
Following the Global Financial Crisis of 2008, we saw an unparalleled global recession in technology, fueled by new technologies like mobile and cloud, which grew into mega-trends that continue to give chances for innovation. COVID-19, we conclude, would have a similar effect on prolonging the demise of organizations that are already on their way out or driving the emergence of new habits and developments that provide enormous opportunities for innovation.
9. Future Accelerated
The phrase "the future is here, it's just not evenly distributed" has been borrowed and applied to venture capital. 500 startups have identified and invested in industries that have become globally distributed phenomena, such as AI, FinTech, e-commerce, and more, over the last decade.
The global coronavirus pandemic has caused us to reassess our working lives and what we may do safely in our spare time. It has also prompted a renewed focus on start-ups that provide innovative workplace solutions as well as risk-free leisure activities for a pandemic and post-pandemic environment in regions like Central and Eastern Europe, which are already a growing source of rapidly expanding start-ups and entrepreneurs.
"In the pre-COVID world, there were certain firms that thrived with incredibly aggressive growth models where the business models were unprofitable, but the companies grew to be large," Lightspeed's Mhatre said. However, in the post-COVID era, that is not a successful strategy."