The VC Fundraising Environment and COVID-19

It’s only Tuesday morning and already it’s been a tough week and while it’s too early to know exactly how #COVID19 will impact the #VC fundraising environment. All of us at Sapphire Partners are getting questions from folks on our perspective, including being sent this article in Trusted Insight on the environment #endowments might be finding themselves given the current market crisis.

Here is my perspective: it feels like a slow down and potentially triage as LPs reconcile their situations is more likely than not, unfortunately. As tough as this might be, it is prudent for GPs to think about this now and not assume that all sources of capital will be there now or post crisis. In the meantime, I suggest GPs:

1. Talk to your portfolio and see where they are, how you can help. Make sure they’re thinking about burn rates and contingencies.
2. Re-visit your reserve math and portfolio construction. Your portfolio is likely going to need help, and you’ll want to support them and make new investments.
3. Reach out to your LPs. We’ve had multiple of our GPs send us notes with how they are doing personally, as a firm and how their portfolio is doing. We love this and so appreciate them taking the time.
4. Consider doing a Zoom update call with your LPs. We’re all #WFH, and a little visual check in can be a nice way to feel connected and provide for expedient many-to-many communication. Let your LPs know if they can help, or just share a virtual #quarantini: https://thenovicechefblog.com/quarantini/
5. Ask your LPs how they are doing as people. And while it might be too soon — it could also be worth asking if the current environment has impacted any of their investment considerations going forward in the near term. It’s better to start the conversation now.

#COVID19 is unprecedented, and it’s going to take time for us to sort out the impacts. In the meantime, any other suggestions from GPs on how to engage your LPs right now?

#openLP #venturecapital #fundraising #vc