Investors and Capital-Hungry Companies Adapt to Covid-19 Crisis

Revenue-based funding proving more flexible over other forms of capital raising.

As experts postulate on the future of supply chains, the healthcare system, the retail landscape, and the workplace in a post-COVID world, the industry that funds these economic engines is already adapting. Investing is being transformed in both predictable and surprising ways by the new economic reality abruptly created by Covid-19.

Some companies face urgent investment needs as revenue dries up during the Covid-19 shutdown. Other businesses are overwhelmed with the demand for products and services undergoing sharp spikes in usage during the crisis and seek partners to help them meet that demand.

Meanwhile, venture capital and other popular sources of funding are either drying up or being severely strained, forcing some companies to seek out new, innovative capital sources that they feel are more adapted to this difficult and uncertain economic climate.

“Fasten your seatbelts, it’s going to be a bumpy ride,” said the National Venture Capital Association in a report that warned “investment in the startup ecosystem is expected to drop significantly. A significant amount of the capital deployed in 2019 came from nontraditional startup investors … who are likely to rebalance investment away from these high-risk and illiquid companies.”