All Raise: Helping Your Portfolio Navigate COVID (For VC Investors) — Webinar Report
Guests: Susan Lyne (Founder & Managing Partner, BBG) and Danielle Lay (Principal, NEA) interviewed by Addie Lerner (Founder & Managing Partner, Avid Ventures).
Throughout the past months, AllRaise has organized frequent zoom conferences on relevant topics for women founders on fundraising in the difficult corona times, managing the sudden changes in business, managing work and household as a working mom, and many more. One of the sessions was also devoted to women in venture capital, where Susan Lyne (Founder & Managing Partner, BBG) and Danielle Lay (Principal, NEA) shared their insights on managing the investment portfolio during the COVID times and brought light into the post-COVID investment predictions.
Read the summary of their advice to fellow VCs and portfolio managers:
As the situation is still evolving, the panelists agreed it is difficult to conclude now. However, it can already be observed that different portfolio companies benefit differently throughout the whole crisis period. The panelists advise waiting a few more months to see the real impact of this crisis, as the economy is predicted to decline and unemployment is predicted to increase.
The effects of COVID-19 on portfolio companies have segmented the portfolio into three buckets:
1, Profiting — kids entertainment app, screen sharing app, etc.
2, Doing very well–recorded positive effects due to launch with essential retailers shortly before the actual pandemic hit (launched cooperation with Walmart, Target, etc.)
3, Not doing well — mainly because they heavily rely on real-life experience (weddings organizers, etc.)
A list of VCs’ advise to their portfolio companies:
- Make sure you do not only do well at this moment but in the future, too
- Check your $ burn situation, 24 months of the runway is recommended
- Are you able to raise equity now?
- If growing — is your growth going to remain?
- What does the behavior look like — now and after the crisis?
- Later stage companies — Is there an opportunity to exit/sell earlier than planned? Explore this opportunity and revise the initial exit plan if needed.
- Early-stage companies — Focus on things you can control, namely:
-Spending — runway recommended to mid/end 2021 — what will it take for you to get there?
-Growth assumptions — model best-case and worst-case scenarios
- Don’t worry about the 2020 plans anymore. Dig deep into your product instead, how it can serve, and if there are more opportunities with it.
To sum up:
In general, the VC funds are still investing in startups however they are more cautious.
They are slowing down the pace to see how the whole situation turns out.
Clearly, there is more investment in health and wellness though.
Last but not least, there is a shift in thinking and that is thinking more about the impact and value for consumers.