How 2020 has changed the venture business

OMERS Ventures
Dec 29, 2020 · 5 min read
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Photo by Kelly Sikkema on Unsplash

Written by Damien Steel, Managing Partner and Global Head of Ventures

As we approach the 10th month of this global pandemic, there is light at the end of the tunnel, but the disruption is far from over. I want to document the enduring shifts I believe we’ll see in the VC world. These are my thoughts today. Ask me in another nine months and they may change, but I wanted to capture this moment in history. Without a doubt I have missed some — so please feel free to add your thoughts to this.

I spoke to a number of fellow investors to get their views about the lasting effects brought about by our pandemic experience. A special shout out to Angela Tran from Version One, Clara Sieg from Revolution Ventures and Prashant Matta from Panache Ventures for sharing their thoughts with me.

Observation: shift from private to public capital

It now seems to me that the private market subsidized growth of 2019 has been replaced by public market growth arbitrage — public companies are trading at such high multiples (providing an extremely strong currency for operations and acquisitions), which allows them to purchase private companies (for something like 10x revenue) and immediately get the bump up to their 20x revenue multiple. It used to be that public company share prices would drop after an acquisition. Today however, public markets seem to be maintaining pricing multiples post acquisition and in some cases even increasing. Just take a look at the great acquisitions completed by Lightspeed (LSPD-TSX) this year as examples.

COVID-19 has led to tech being thrust into the limelight and it hasn’t looked back since!

Enduring shift:

Observation: the demise of geographical barriers

Enduring shift:

Observation: new VC talent severely hampered by lack of networking opportunities

On the flip side for founders, it used to be notoriously hard to get a VCs attention without a warm intro. Arguably that has gotten easier. Young VCs in particular are dying to build networks, so they are more open than they were in the past and have more time to respond because they are not travelling as much.

It’s harder to forge trusting relationships, but existing relationships are getting stronger as we all face common battles. My guess is that VCs are now “horse trading” more due to the lack of conferences or other means to source deal flow. And a lot of that horse trading is done at Partner level.

Partners are doubling down on existing networks and tapping into existing portfolio company founders to find deals is becoming increasingly popular. Seed funds have become the primary hunting ground for series A-B investors — even more than before.

Enduring shift:

Observation: VCs are leveraging data more than ever

Enduring shift:

OMERS Ventures

OMERS Ventures is the venture capital investment arm of…

OMERS Ventures

Written by

OMERS Ventures is a multi-stage VC investor in growth-oriented, disruptive tech companies across North America and Europe.

OMERS Ventures

OMERS Ventures is the venture capital investment arm of OMERS, one of Canada's largest pension funds with over $100 billion in net assets. OMERS Ventures is a multi-stage investor in growth-oriented, disruptive technology companies across North America.

OMERS Ventures

Written by

OMERS Ventures is a multi-stage VC investor in growth-oriented, disruptive tech companies across North America and Europe.

OMERS Ventures

OMERS Ventures is the venture capital investment arm of OMERS, one of Canada's largest pension funds with over $100 billion in net assets. OMERS Ventures is a multi-stage investor in growth-oriented, disruptive technology companies across North America.

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