What’s the mood in the valley like?

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

Key highlights:

  • 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 🙏

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