After my recent tweet storm on SaaS vs COVID-19, many VC/Founder friends of mine from India, Singapore, France reached out to me asking how Silicon Valley is reacting to the COVID-19 crisis. I thought I’ll write a short post about what I’m seeing/hearing from investor-founder friends in the startup land for the benefit of global audience.
Week starting 6th of April 2020
- Starting to see hiring freezes and layoffs, full list can be viewed here
- Bridge rounds are making noise, mostly debt and very rare, e.g., Airbnb
- New investments in the online economy (e.g., Notion) but not in the offline (or the face-to-face) economy
- Hearing murmurs about VCs pulling back term sheets, but haven’t seen any concrete news. Also remember, Term Sheet is a non-binding document so 🤷
- Public markets are in total denial, DOW is up by 7% as the week started, despite 25% unemployment and GDP expected to fall by 30%+
- Most VCs I spoke to think it’s a falling knife with biz down across every industry except online retail and grocery stores. Total credit card spend down by 40% (source)
Overall, investors are bearish about the next 6-12 months but bullish about the next 5-10 years post-crisis.
Investor sentiment is likely to change if:
- We smash the curve and lift the lockdown with a coordinated COVID-19 control and prevention protocols (e.g., wear mask all the time, thermal screening etc.)
- Start to find a cure for COVID-19 (drugs or vaccine)
Not yet sure:
- Will it be a V shape recovery or U shape?
Hoping for the best and hoping for a miracle 🙏