Venture Capitalist Perspectives in a COVID-19 World – Part 1 of 2

By Diana Cugliari
Vice President, Finance
Pittsburgh Life Sciences Greenhouse

After an informative conference call with leading venture capitalists, sponsored by the National Venture Capital Association, I felt there were some great takeaways worth sharing. The overarching theme was how to respond to and manage startup challenges that are only now starting to emerge in the chilly economic climate of a COVID-19 world.

So, is anyone still investing? 
The answer is, generally, yes. On a macro level, venture capitalists are looking carefully at businesses in the early stages, where they may be seeking funding for early product development, for example. As companies move into later stages of growth, uncertainty starts to hamper their ability to make decisions—particularly during a crisis like the one at hand–so they are less attractive to investors.

What are the secrets to presenting well to venture capitalists in a time of virtual meetings only? 
Everyone needs to be using video for presentations, rather than hiding behind voice-only communication. The visual aspect means the meetings will take longer, but there is no overemphasizing the importance of the visual component in terms of making an impact through clear communication of ideas, potentially enabling a connection on a deeper level. Brevity and accuracy become paramount; and keeping details, content, and data tight will help to streamline initial presentations—get to the point quickly, and make the point clearly. Also, consider building relationships with shorter meetings with specific purpose(s). Follow-up sessions can often be kept to 30-45 minutes with each session building on the last.

What makes a pitch more attractive to venture capitalists during a downturn in the economy? 
Often, they (VCs) are looking for signs of life in troubled times. They want to know that you’re still engaging your customers and moving your product; that you’ve found the pockets of opportunity for your product to solve a key problem and prove that you’re still viable in this environment (i.e., could you diversify and/or move part of the business online?).

What are the most important data points for a startup to show potential investors, to prove they’re on point?
In short, customer retention and customer expansion are most attractive; clarity in financial planning and evidence that expenses are being brought under close control are also of great interest. Most importantly, under our new collective reality, show how you are going to retain control of the company’s destiny.

What else are startups to do differently now, than they did in the pre-COVID world? 
Primarily:  Make it your top priority to ensure your people are safe and healthy. Next, look at your existing customer….take great care of your existing customers. Modify your processes to generate goodwill among your clients and retain them through the hard times—anything you’re building has to be for them. Another central idea is to pull back on your expenses and do your best to “make do” with the resources at hand, erring, of course, on the side of caution and conservation, and putting the people and public health first.

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