Covid-19 pandemic is a turning point for many investors and entrepreneurs, as it has brought many businesses to a standstill, not to mention Venture Capital. As they invest startup companies and small businesses that are believed to have long-term growth potential, having a human interaction between parties are very crucial. Then with everything turned into daring, how does venture capital work amid the pandemic?
The moment we discovered about Covid-19 in Wuhan, China back in December a year ago, has the rest of the world taken aback. Today, Covid-19 has become a massive pandemic with 26.2 million cases and toppled down so many business industries. As it has reshaped many industries, this is how pandemic reshape venture capital (VC).
Covid-19 pandemic is a turning point for many investors and entrepreneurs, as it has brought many businesses to a standstill. According to a survey by Tech in Asia, there are about 80% of businesses that have been impacted by the pandemic., If the virus keeps on spreading, this may lead to another blackswan phenomenon that will most likely cause a worldwide crisis.
In exploring the dynamic venture capital environment, CoHive hosted CoTalks online entitled: “How Venture Capital Shape its Future”. This fascinating event aims to give more insights about how this pandemic could reshape venture capital. As we invited industry experts Raditya Pramana from Venturra Discovery, Aaron Nio from GK Plug & Play, as well as Teezar Firmansyah of Kolibra Capital, as well as our moderator Benard Poernomo as Customer Acquisition & Partnership Lead of CoHive, we present you some recaps of what happened during the discourse.
“It’s indeed a bad situation for all of us, as it has changed many things especially the way we work. As investors, we prefer to meet directly with founders and visit the company,” Teezar explained
For the past few months, many countries have set travel restrictions to prevent the spread of the virus. Yet for VC it puts them in dire straits. Undoubtedly, human interaction is crucial when it comes to business. However, due to abiding by health protocols, the much needed social interaction has put future transactions on hold. The pandemic has also caused a decline in sales and the fundraising timeline to be disrupted. Due to the current ciscumstance, the VCs need to focus on helping their existing portfolios first and take time to see more deals on the table.
As a result of the pandemic, the behavior of the customers has also changed, causing the market to shift. Due to this phenomenon, VCs admitted that few sectors have managed to divert their attention to them. The current circumstance have pushed people to be more creative with their innovations, which could be their opportunities to gain more investors. Seeing this, both Radit and Aaron admit that health tech is becoming more interesting and have seemingly changed the healthcare game to a better path. Other than that, digitech is also one of the sectors that have also stolen their attention. With everything going on, Aaron noted that transforming the traditional market into a digitech based platform is a brilliant idea, and if it’s well planned, it will be even more attractive for the investors.
Despite the limitation that slowed down the investment activities, they all agreed that they’re still open to new incoming opportunities. That said, even with the unfortunate situation, startups still have their chance to level up their game with the funding. One of the ways is by sticking to the “why” question. Teezar explained that investors need to be convinced that the business they’re about to invest has all the answers to the “why” questions, such as—“why is your business the right one for the market” or “why should we choose you”. Also, Teezar mentions that a strategic move is one of the core reasons to become attractive for the investors.
This year has been another challenging one for many industries. So, for growing companies like startups, it is time for you to look out for more options. Acting decisively is a must, but it’s also important to map out everything and identify your weak and strong points. Be open to your teammates, discuss thoroughly, and try to understand the current market. To survive this stumbling block, startups need to be extra careful with their cash. Startups need to be ready for both best and worst scenario to come. As quoted by Aaron, if you fight and perceive hard enough, you’ll get to the right decisions.