What Does a Post-COVID-19 Early Stage Venture World Look Like?

Many parts of the world are slowly opening up and lifting restrictions, as we adjust to a new normal. These tumultuous times are having a profound impact on business and the global economy as a whole.

Venture deal activity saw $34 Billion invested across 3K deals in the first quarter of 2020. By quarter’s end, VC funds raised $21 billion across 62 vehicles. U.S. Venture Capital Investment had a strong Q1 2020 showing, but COVID-19 brought an economic downturn which has slowed down activity.

This obviously translates to an entirely new landscape for the venture capital, investment and startup markets. We took some time to think about what this could look like.

1. We continue to love the marketing tech space and those companies that sell SaaS, in fact, we know of several companies that are accelerating revenues during this period. The reality is, this is a good time to consider making those company software updates, CRM overhauls, or general upgrades that benefit your team’s long-term revenue potential and cost savings. Smart CEOs are using the crisis to justify discounts while still supporting partner’s products and services. There is more bandwidth and time for implementation projects, as well as for training your engineering and products team on updating new tools and workflow from remote locations. In a challenging macro environment, the most efficient companies will win, and having the right software will be critical to those efforts.
2. Many industries are thriving and growing during this period like OTT, streaming, gaming, original content, health/wellness/CBD, video conferencing, 3D printing, etc. We are long on the wellness and fitness train as people are thinking of staying healthy and well even past this pandemic. For example, as CBD becomes mainstream, and more people become aware of its benefits, companies like Beam, a C2 Ventures portfolio company, are beginning to play a bigger role in the wellness category. They’ve even been covered in the likes of The New York Times.
3. C2V didn’t invest in the Ad-Tech space before the pandemic and we certainly like it less in this current environment. Assume that your Ad-Tech company could be in the middle of M&A or consolidation conversations like the Factual/Foursquare deal and think about what that could mean for you. Chris shared some of these very insights in a recent Business Insider article (behind paywall).
4. People’s behaviors will forever be changed in the long term and our team is excited to see what companies will emerge from the ashes. As early-stage investors, we are very bullish on the innovative startups being created NOW that will rise like a phoenix. We predict this summer and fall we will begin to learn about startups focused on the future like online retail, online learning, remote-work tools and services, home fitness, remote healthcare, logistics and supply chain, travel and clean energy (let’s not lose this huge improvement in air quality!) We’ll see new efficiencies in all challenged sectors.
5. Funding has been and will continue to be available for those companies with real, economically scalable business models, and those who showed some level of steadiness through these times. The investor community is alive and well, and as we mentioned, we expect to see some excellent companies get funded post this period.
6. One of the biggest topics has been working from home and the future of the office. While traditional incumbents such as WeWork and Regus are struggling and will need to reinvent themselves to survive, there is also a tremendous opportunity here to fulfill new demands for new needs. For instance, something we’ve heard from a number of our partners and industry colleagues is a desire for a flexible solution that would allow employees to come into the office 1–2 times a week to hold meetings and collaborate. And if you look beyond just the workspace, there potentially could be a whole new throng of digital nomads who will need different tools and services to help them work within their lifestyle.
7. On that note, while we’re focusing on how to improve our working lives, we’ll also want to work smarter. That means that the much talked about buzzword automation will finally truly have its day in the sun. By building the right tech stack for your business and your employees, you can save time on recurring and rudimentary tasks. This will mean less time getting bogged down by the day-to-day operations and more time to focus on the biggest most impactful tasks. 2020 has taught us all the importance of focusing on the big picture, which is now achievable work-wise with the right set of tools at your disposal.
8. This last one, is something we are just as much hoping for and actively taking the steps ourselves, as we are predicting happens. Given all of the social discourse and action happening, we believe we will finally start seeing a more diverse and inclusive community within the venture capital and startup ecosystems. We have gone far too long without this already occurring, but believe 2020 will be the year we make the much-needed steps to bring more women and people of all races to the table to start their own businesses, hold leadership positions and become more active in the investment world. We are already seeing steps being taken, but need to ensure momentum continues. We at C2V back these initiatives 1000% and will be getting involved in every which way we can.