Venture Capital Funds Help Startups in the Wake of Pandemic

Venture Capital Funds Help Startups in the Wake of Pandemic

While the majority of companies are struggling during the turbulent times of 2020, some managed to navigate as painlessly as possible through the losses.

A worrying number of people lost their jobs, stores are shutting down, work completely stalled for the tourism sector.

But, one category of companies has a certain safety net and they seem to be doing just fine. Who are we talking about? That’s right, you probably already guessed it – startups.

VCs in Advisor Roles for Startups

Besides the obvious funding, many venture capital funds are taking on the advisor hat when it comes to startups. Invaluable advice from the experts is necessary for young, inexperienced companies that are just starting out.

Tailoring financial plans and cooperation in various business segments is a definite path of recovery for many startups.

The combined experience of finance chiefs at portfolio companies with the enthusiasm of young CEOs is probably the winning ticket out of this uncertain period.

Managing the business from home is one of the most discussed topics this year and both sides are trying their best to adapt to these unexpected circumstances.

Investing in Startups During Pandemic

The most challenging turned out to be the process of investing. The investments themselves haven’t ceased; on the contrary, they are pretty much the same. 

investors investing in startups
Venture capital funds are taking longer to decide on startup investments.

What is then the problem? 

Investors are taking more time to decide on the investments. The troubling factor is that they cannot meet with startups face-to-face and they need to turn to online communication through telephone and video calls.

Naturally, healthcare startups are currently receiving the most funds which is the understandable decision of venture funds.

The Future of Startups

Startups are managing just fine, according to the National Bureau of Economic Research. The academics talked with almost 1,000 venture capitals (572 in the US and 381 worldwide) about the state of the startups they invested in.

A surprising 52% of startups are either not affected at all or positively affected by the pandemic. This is an encouraging fact for the startup economy and its future growth.

The rest of the 48% is either negatively or very negatively affected. But, the silver lining is that only 10% of those are very negatively impacted by the aftermaths of the coronavirus.

Investing in new young companies is important for industry leaders as well. By supporting and collaborating with startups, industry giants can stay at the top of the game and keep being innovative.

Some of the largest, most successful and innovative companies in the world nowadays, such as Amazon and Facebook, understand that startups are sources of new cutting-edge ideas, fresh perspectives, and the latest technologies.

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