It is no secret that COVID-19 has shaken up the financial landscape on a worldwide basis. Many corporations that were experiencing healthy growth have undergone a freefall, and it has left many industries scrambling to find their bearings.
Adhering to the status quo no longer guarantees a consistent stream of revenue, and companies have had to reconfigure their strategies to land on their feet. Nevertheless, even with all the disruption, startups can still obtain funding, as investors still look to partner with promising new corporations.
Looking At The Reality
Before deciding how to proceed, it helps to have some solid numbers to inform your approach. Despite initial fears of a complete overhaul to venture capital, the dust has now settled, and only about ten percent of industries have suffered any lasting harm. While that is certainly lamentable for the companies affected, it means that there is now data to analyze that bodes well for 90% of those sectors in need of capital.
Among startup backers, about half of all their partner companies have suffered no damage whatsoever during the pandemic. Two influential surveys were conducted by Paul A. Gompers, Eugene Holman Professor of Business Administration of Harvard Business School. Of the 40% impacted, the effect is not significant and is expected to be met with workarounds and creative alternatives to previous ways of doing business.
According to this same study, 91% of venture capitalists surveyed reported that they expected their portfolios to outperform the major equity indexes. In addition, investors are looking forward to funding new projects.
Another good sign is that a large segment of the venture capital pool is currently sitting on a collective pool of money. Throughout the country, as spending has decreased, savings for many people has increased, leading to larger bank accounts. This has created an environment where financial institutions have more money to lend and are able to court more opportunities.
In addition, for individual investors or groups, the first half of 2020 saw them investing at just 71% of pre-COVID levels. This meant that there was a surplus of funds that continued into the end of the year with firms reaching 81% capacity.
During this time, the greatest asset to any firm looking to raise funds is patience. It will require diligence to go back and revamp presentation models to address COVID-19 concerns. Demonstrate how you will deal with contingencies by fully developing your business plans.
Outline the ways in which you prepare to meet ongoing demands by researching expert advice on scenarios that could impact your business, as the response to COVID-19 continues to unfold. Fidelman and Co. can assist you in the area of research analysis to forecast trends in your field and in consumption, market, and buyer behavior to best determine your strategy in moving forward.
Your pitch decks need to be honed and polished to assure investors you can meet your clients’ ongoing needs. Additionally, you’ll need to continue sourcing revenue in a rapidly changing culture and provide solid ways of doing so.
Don’t lose heart at the downturn of investing, as much of it has been delayed by simple logistics. For example, meeting with key people has proved to be more difficult. Nevertheless, networking has and remains a vital part of the business, and this has been largely affected by the lockdowns throughout the country. Many Silicon Valley techs have relocated to homes outside the area, further affecting efforts to meet up.
As the crisis continues, and people and governments find solutions to the ongoing problems that crop up, it may take more time to make connections using Zoom, Skype, and other programs, yet the underlying infrastructure of investors is still there as is the desire to fund new companies as is the capital needed to do so.