VCs are adjusting to 'a new normal' amid coronavirus - Business Insider

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VCs say that they're waiting for the 'new normal' before making big new startup investments: 'Whether they admit or not, everybody's in a little bit of a wait and see period'

Two weeks ago, Michael Jones, the CEO of LA-based startup accelerator Science Inc., thought that the coronavirus panic was probably exaggerated— business would have to continue as usual sooner rather than later.

"We may not return back to normal — we'll likely find a new normal instead," Jones told Business Insider last Friday.in the first quarter compared to the same timeframe last year, according to the research firm CB Insights— a possible sign that the VC industry is taking a wait-and-see attitude before writing any big checks.

"We're waiting to see what's going to happen, waiting to see where the market shakes out, and waiting to see how that potentially impacts post-money impact," Semil Shah, the sole general partner at Haystack VC and a partner with Lightspeed Venture Partners, explained. "This is already an environment where valuations have been too high."

Over the past ten years, the VC industry has diversified far beyond traditional venture funds. Venture capital is now crowded with investors wielding different levels of financial firepower — angel investors and microfunds, corporate venture capital, and mega-sized funds, to name just a few. "I'd say there's a lot of fund managers who are just kind of in a holding pattern, especially in some of the newer funds where they have to make capital calls on a per deal basis," said Chapter One's Morris Jr. "A lot of LPs right now are going through a tumultuous time in their own personal capital.

 

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