Years from now, when the history of mankind is written, 2020 will be remembered as “The Year of Covid-19”, an infectious disease caused by a newly discovered corona virus. The COVID-19 virus spreads primarily through droplets of saliva or discharge from the nose when an infected person coughs or sneezes. At this time, there are no specific vaccines or treatments for COVID-19. However, there are many ongoing clinical trials evaluating potential treatments. The Covid-19 crisis has changed the world in more ways than one. Even venture capital will find itself in the throes of change.
SM Global Finance is a Switzerland-based boutique venture capital fund which nurtures early stage ventures for success through seed capital, mentorship, network, experience and entrepreneurial wisdom. Here, Mr Dan Adrian Pop, the driving force behind SM Global Finance, talks about the venture capital business in a post-Covid 19 world.
Interviewer: Thank you for speaking to us Mr. Dan Adrian Pop.
Dan Adrian Pop: The pleasure is mine. And you can call me Dan!
Interviewer: What’s the satiation with the venture capital companies right now?
Dan: Currently, the VCs are mainly looking at managing their existing portfolio of startups instead of making investments. While the focus for startups is on conserving cash as most of the expenses are being diverted towards managing Covid-19 related expenses.
Interviewer: How’ is the startups business going to be affected Covid-19 pandemic?
Dan: Businesses that existed before the Covid-19 outbreak could see a change in how markets and customers perceive and adopt their technologically-enabled solutions in a post-Coronavirus world. The new areas of growth and opportunity have kept startup investors on standby to invest in them. Early-stage venture capital funds are hopeful of a handful of ideas to back once the new normal sets in.
Interviewer: Which are the growth areas according to you?
Dan: There’s a good possibility that telemedicine will become the new normal. Medical consultation will happen over a call or video interaction particularly because hospitals could get increasingly crowded. Probably there’s potential in drone-based solutions for sanitation, farm monitoring, delivery of certain kind of goods – all aimed at avoiding human intervention. Of course, this would mean a relook at the existing laws about drone usage. Would this become a long-term solution? Only time will tell.
Interviewer: Any other segments?
Dan: Among the segments, which have already seen some scale but not as much as e-commerce and food-tech, education could possibly be the key area for investors to bet on as digital learning and personalized coaching take new form and shape in the current situation.
Interviewer: Do you see any growth because of behavioral changes?
Dan: Consider wearing masks and washing hands. It may be premature to say right now but wearing masks might become the new normal. Would masks become a fashion accessory?
Interviewer: Have investors put a brake on or stopped investing in startups?
Dan: No. They are open for business and are looking at new opportunities at early stages. VCs with a horizon of seven-eight years will definitely not stop. Due diligence, however, could take time and might cause delay to the early-stage investments. Late-stage VCs may face a challenge because they look at 1-2.5 years horizon. The bottomline is investments cannot stop because there is a portfolio approach and a particular number of startups have to be funded in a time frame.
Interviewer: What has been SM Global Finance’s response?
Dan: At SM Global Finance we are a team of experienced investors, operators, networkers, cheerleaders and fundraisers. We share our expertise with start-up founders and partner with them through every battle, charging towards successful outcomes. For now we are keeping a keen eye on the situation and looking at all possible scenarios before we make any decisions. Prudence never hurt anyone.