Rocio Wu is an endeavor partner at F-Prime Capital who focuses on early-stage investments in software/applied AI, fintech and frontier tech investments.
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While some U.S. financiers might have taken comfort from China’s rebound, we still find ourselves in the early innings of this period of unpredictability.
Some epidemiologists have approximated that COVID-19 cases will peak in April, but PitchBook reports that dealmaking was down -26% in March, compared to February’s weekly average. The decline is most likely to continue in coming weeks– a number of the deals that closed last month were initiated before the pandemic, and there is a lag in between when offers are made and when they are announced.
There are many examples from the 2008 recession, consisting of lots of extremely valued VC-backed businesses such as WhatsApp, Venmo, Groupon, Uber, Slack and Square. Other early-stage VC s seem to have shown up at a comparable conclusion.
Also, early-stage investing seems more durable. During the last economic crisis, angel and seed activity increased 34% as interest in the stage expanded during a period of prolonged development.
Additionally, there is still capital to be deployed in categories that interested investors before the pandemic, which may set the brand-new order in a post-COVID-19 world. According to data provider Preqin Ltd., VC dry powder rose for a seventh consecutive year to approximately $276 billion in 2019, and another $21 billion were raised last quarter. And taking a look at the offers on the early-stage side that were made year to date, especially in March, the vertical classifications that amassed one of the most funding were enterprise SaaS, fintech, life sciences, health care IT, edtech and cybersecurity.
Image Credits: PitchBook
That stated, if VCs have the capital to release and have the ability to conquer the challenge of “having actually never ever met face to face,” here are six financial investment trends that could emerge when the pandemic is over.
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