InReach Ventures at times of COVID
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Over the last 5 weeks, many entrepreneurs have asked about the position of InReach Ventures, given COVID-19 and the potential business implications for the fund, the investment portfolio and the overall investment strategy.
Let’s first state the obvious: this is not business as usual. There is nothing in the world that is business as usual and it would seem short-sighted for a venture firm to simply say “we are open for business as usual” or “we are not investing and need to wait and see”.
We are all affected by the current world events, both in terms of our deep emotional connections with our friends and the people we love, and of course our work and colleagues. The InReach team is an internationally diverse group, with most of us having immediate family and relatives in other countries, making social distancing very very distant.
The objective of this post is not to provide a macro view of what is first and foremost a global humanitarian challenge that we have not yet even fully understood. There are many established sources on this topic, including interesting work done by McKinsey & Company.
In the following, with a significantly less ambitious objective, the idea is to share the operational impact of COVID-19 on InReach. In common with all the entrepreneurs with whom we have the opportunity to engage daily, we have been working hard to adapt ourselves to the current changing economic and social environment.
1 — Safety is imperative: InReach Remote Organization
The UK was slow to adopt social distancing rules, but we did not wait for the government to tell us what we had to do. We learned and exchanged views with our entrepreneurs and co-investors and concluded to move to become fully remote about 10 days before it was required.
In parallel with shutting down our office, we worked hard to develop and tailor our existing established communication processes to be fully optimised for this remote environment. Again, we learned from some of the best entrepreneurs. We can proudly say today that InReach is operating as a fully remote organisation and there is no impact on our effectiveness and efficiency. Online group games, virtual coffees and kitchen slack chat are now included as part of the remote working day. Execution is nothing if it is not sustainable, so we strive to maintain the level of personal communication which is vital to sustain the firm’s culture. More work and experimentation will need to happen in the areas of virtually supporting team building activities and personal wellbeing. Any tips you have are super welcome. We will experiment with anything!
We have made our internal guidelines on remote work public, along with our learnings and challenges from a month now of remote work. A new post will come soon!
2 — Entrepreneurs need funding: InReach is more responsive than ever to inbound requests
We do not condone the behaviour of venture capitalists who simply do not respond to entrepreneurs. We dislike this behaviour in general, but even more in times of uncertainty. We improved our SLA to entrepreneurs and instead of our standard response time of 7 days, we accelerated this to 3 days.
3 — The portfolio needs attention: InReach is investing more time with portfolio companies
Most entrepreneurs are trying to figure out the impact of COVID-19 on their business. We are not the source of all the answers, but we are working hard to provide a sounding board to our entrepreneurs. Last week we managed to have a 10 hr video based strategic offsite with our friends at Kayzen! This was scheduled pre-COVID, which we subsequently turned into a virtual event. It was actually an amazing and incredibly effective experience, with participants from Berlin, London, Helsinki and Bangalore.
4 — COVID is used as an excuse: InReach executes on a strategy not on momentum
Low quality investors have been using COVID-19 as a way to extrapolate more value from entrepreneurs and re-negotiate early stage investment deals. We have seen atrociously entrepreneur-unfriendly terms being put forward under the COVID-19 banner, which we feel are a disgrace to the industry.
At InReach we have made zero changes to our investment terms and we consistently try to invest at valuations which we think are fair and that we are comfortable with. We are just not momentum investors and we never will be.
5 — COVID is driving a lot of new consumer behaviour: InReach trying to figure out the implications
As written here, at InReach we primarily invest in SaaS, Consumer Internet and Marketplaces, with a typical initial check size of between €500K — €2M. What we are experiencing today is unprecedented. Below is one of the many possible illustrations from Apple Mobility Trends Reports.
We are still processing the information and trying to learn from as many diverse sources as possible. The key question that we are trying to answer is: what is the current new technology driven consumer behaviour that will persist after COVID? We are convinced that within Europe, there are entrepreneurs who are watching everything that is happening and are building companies solving problems for tomorrow’s world. We want to find these entrepreneurs and help them!
Many things at InReach are now different since COVID-19, but some things will always stay the same: we work hard to unleash European Entrepreneurship. This is our firm’s overriding mission, as we adjust in these changing times and environment to develop the best way to give this mission its true meaning.
