Thanks to one of my followers (@Staktaev) I have my hands on the doc, which I’ve been looking for quite some time. Although, it’s not directly ‘crypto-related’, still, it addresses an important question — how both VCs and their invested companies (on seed and later stages) react to the current crisis.
NFX — five-years-old venture capital firm located both in California and Israel — posted this report, dubbed “VC & Founder COVID-19 Sentiment Survey Part I & II”, to DropBox on April 2020. It consists from several dozen bar diagrams, which are based on interviews with 286 founders and 114 VCs, and cast a light on the startup world’s gloomy present and future pictures.
Readers of my previous reviews (like ‘Wrack To The Future’, published back in March) know that I’m, myself, expect this self-inflicted crisis having the long term negative consequences for World’s both economic and socio-political environments. Looks like the majority of VC (66.7%, with 36.9% of them giving govs the ‘F’ rate for handling this situation) agree with that we are heading into recession (whilst the most founders are still counting on an early recovery).
It’s very natural for entrepreneurs to be more optimistic than investors. Still, even among the former more than a halve (56.7%) has freezed their hiring, while a third (32.5%) is already making layoffs. Additionally, almost 50% of startups have delayed their fundraising plans, when VCs have sharply turned their attention from evaluating new deals (41.6% / 25.1% — before and after crisis) to working with portfolio companies (47.2% / 31.6%).
The bottom line is that as this crisis continues to go South an increased number of VCs and founders start to feel that this dark tunnel, we are still digging ourselves into, is rapidly elongating itself beyond 2022.
To the majority of market participants it looks as a replay of 2007–2008, when fundings rose above pre-crisis levels only in 2011 (2 years down / 2 years up). Myself, I do not think that the history will repeat itself — most probably, it’ll rhythm but we won’t like that poetry at all.
Still, there’s a silver-lining, although a very thin ones.
First, this report covers VCs and startups focused / located mostly (~70%) in SF and NY (with only 28.1% of them — in EU and 13.2% — in Asia). There’s still a glimpse of hope that some other world’s regions, underrepresented in this doc, will serve as a locomotive for faster recovery (major changes in local business legislation, lavish stimuluses for SME etc).
Second, while, quite naturally, 72.7% of travel industry orientated startups registered the drop in revenues alongside with Energy, Recruiting, Construction and AdTech, at the same time, Food & Beverage, Fitness, Healthcare, SaaS and Blockchain companies (42.9% of them) reported surpluses.
Not that it should surprise us, right? :)
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