Survey: Top Venture Capitalists on Investing, Raising Funds, and Portfolio Support in the COVID Era

For Kauffman Fellows
Summary of Study

Bottom Line: In this survey of 90 of the world's top venture capitalists (VCs), respondents explain how they're deploying capital during this pandemic-induced economic crisis. They reveal their perceptions around raising more capital, whether or not they’re shifting their investment focus, and how they're supporting their portfolio companies. A common theme in the survey is that companies that rely on discretionary consumer income are most likely to be hurt by the crisis. Concern, stress, worry, and exhaustion are also common among respondents, but there's also a strong sense of community. 

  • Of those surveyed, 40% are actively raising a new fund, 46% have raised a new fund in the past 12 months.
  • A majority (75%) of respondents expect capital deployment to slow down, yet the remaining 25% expect to increase their deployment. 
  • A strong majority of VCs (85%) think it will be harder to raise capital from institutional investors, while 15% said things will remain relatively consistent with the past. 
  • 43 percent of investors will allocate more follow-on investments, whereas 57% will stay the course with their existing follow-on strategy.  
  • Only 16% of respondents said they are planning to shift their focus to a new sector for investment due to COVID uncertainty.

When asked what company sectors will likely have difficulty raising capital in an economically depressed environment like a recession, the following categories came up most often: 

  • Consumer
  • Travel 
  • Retail 
  • Hospitality 
  • Luxury 
  • Cleantech 
  • Real estate tech 
  • Oil focused
  • Non-essential SaaS products 
  • SMB focused 
  • Consumer discretionary and DTC e-commerce
  • Brick and mortar

Respondents said that any companies that rely on offline transactions or in-person traffic are going to be in very difficult positions. Respondents also cited companies with high cash burn rates as in a dangerous position, particularly in parts of the country with extended stay-at-home mandates. 

Despite a general pessimism, survey respondents also reported a strong sense of community and feel a high amount of responsibility to support their current portfolio companies for the duration of this crisis. 

Read the full study HERE. 

Feature Charticle

Venture Capitalists Capital Deployment During COVID

Kauffman Foundation

 

Findings:

  • In this survey of 90 of the world's top venture capitalists on how they're deploying capital during this pandemic-induced economic crisis, a majority (75%) of respondents expect capital deployment to slow down, yet the remaining 25% expect to increase their deployment. 
  • A strong majority of VCs (85%) think it will be harder to raise capital from institutional investors, while 15% said things will remain relatively consistent with the past. 
  • A common theme in the survey is that companies that rely on discretionary consumer income are most likely to be hurt by the crisis.
  • Despite a general pessimism, survey respondents also reported a strong sense of community and feel a high amount of responsibility to support their current portfolio companies for the duration of this crisis. 

Read the full study HERE.