The Venture Economy Perspective: A Conversation with an Early-Stage Investor

Thinc Strategy

June 22, 2020

The Venture Economy Perspective: A Conversation with an Early-Stage Investor

Wouldn’t you love to have a crystal ball, especially now with so much uncertainty in business and in life? While we know that’s not realistic, we asked Lister Delgado, of NC IDEA Fund Partners to share his thoughts on the future for venture-backed companies, emerging industries and the entrepreneurial community in our recent webinar, co-hosted with the Bagchi Group.  

Here are a few of our top takeaways from Lister’s conversation with Cindy Anderson, CEO of Thinc Strategy and Neil Bagchi, Managing Attorney, Bagchi Law.

  • Venture capital firms only see a part of the economy, but within their part of the market, the venture economy, VC firms see a lot of companies. And when you look at 1000-2000 companies, you begin to see patterns and trends.
  • One trend is greater focus on near-term performance. Venture investors are increasingly advising portfolio companies to shore-up profitability. This is a shift from the traditional emphasis on pushing for rapid growth. Today, with so much market uncertainty, improving profitability, or reducing burn rate, is essential for start-ups to stretch their cash.
  • Regardless of profitability, the economic and market uncertainty may put downward pressure on valuations. One factor that could offset a decline in valuations is the amount of money that’s available.
  • As investors look to deploy capital, they are facing the same challenges as we all are in shifting how they conduct business. Investors typically meet the leadership team for prospective portfolio companies in-person and that’s not feasible today. Some of these meetings are migrating to videoconferences, but investors are also finding other work-arounds to reduce risk. This includes an increase in co-investing, syndicated deals and reaching out to other investors to tap their knowledge. According to Delgado, “When you cannot meet, the best thing is to rely on someone you know.”
  • Even as start-ups look to preserve cash, this can also be a good time for investments. Delgado advised that if a company is confident in survival, spending a little on marketing or product development as they adjust their strategy can be very advantageous during this time. A down economy may present an opportunity to take advantage of the weakness of a competitor. Or, an entrepreneur may see a potential new customer market segment.

For more of our conversation, you can click below to listen to the full webinar.

Raising Capital Webinar

Thursday, June 18th @ 8:00-9:00am EST

Speakers

Neil BagchiBagchi Law, Managing Attorney and Bagchi Group, Founder & CSO
Cindy AndersonThinc Strategy, President & CEO
Lister Delgado IDEA Fund Partners, Managing Partner


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