Singing on the sofa
For those of you that are at all interested, this is simply our current thinking at Ada Ventures, given these unprecedented times.
So, first to Ada Ventures — what are we doing right now? Alongside communicating with our portfolio companies and our investors, we are actively investing. We are fortunate to have closed our fund recently, which we feel super lucky to have done. We are reacting dynamically to a market that’s doing the same, but we are very much open for business. We are closing on two investments this month, and expecting to agree terms with others.
We do expect the life cycle of successful venture-backed start-ups to go up — it will take longer to get to liquidity, which increases the overall risk on the portfolios we’re building. This means, generally, that VCs will want more capital held in reserves to support those companies for longer, and we’re no different there.
Our focus on diverse and inclusive teams and cultures will become even more important during these strained times.
Zooming out, recent stock market falls have been coming for some time. Long term QE policies with sustained low interest rates and minimal cost of capital have been sustaining growth levels for an unusually long bull run. Something had to bring this party an end it seems like our Black Swan event was indeed a virus.
So capital, including VC, will get scarcer. One consequence of this is that societies and companies will eventually get leaner and fitter. We’ve had a mental and physical wellbeing crisis brewing and out of these hugely troubling times can come opportunities to rebuild and improve. We might become kinder, healthier versions of ourselves. Our companies might find reasons to focus on purpose, not only profit, whilst also becoming more financially viable in this completely different capital market.
More and more business, VC included, is being done virtually, which is a form of efficiency and leaner operations. At Ada, we do almost all of our initial investment work digitally, using Zoom and other tools, and this is increasingly becoming the norm in our business, so we expect this trend to accelerate.
Given that our friends, families and business are currently safe and secure, we’re thinking about two things in the main. What can we do to help others, and what are the interesting trends and opportunities right now.
To the latter point, there is medium and long-term optimism out there. Sofa Singers really caught our eye in the UK
“The Sofa Singers is a free online singing event that aims to bring people together from around the world to spark joy and human connection”
Life is going ever more digital, and COVID19 has accelerated that trend. Internet traffic is up 20–40%. This can be a positive for communities and our sense of togetherness. Yes, it’s different being in a virtual choir to one in your local church, but you can extract much of the same joy from the experience, and your choir-community can be significantly larger and more diverse.
The fact that we’re not flying or travelling to anything like the extent we were will give the climate a much needed break. Presumably the Ozone layer will start to heal during this period of time.
COVID19 has scary and lasting consequences for all of us. Life really won’t go back to “normal”, that much is now clear. Look after yourselves. Go for a run (if safe to do so). Recognise your privileges. In writing this, I recognised, once again, perhaps my biggest privilege of many: that of hope, of optimism. Not everyone has that, particularly now, and I am grateful.
Here’s a useful resource — 100 startups offering free resources in response to COVID19 : https://www.vccafe.com/2020/03/18/100-startups-offering-free-products-and-services-in-response-to-coronavirus/
