How the Startup Investor Community has Responded to COVID-19 as the Pandemic Enters Year-Two
500 Startups, a leading global early stage venture capital firm, has been keeping a pulse on its startup investor community since the pandemic began last year. When 500 first surveyed early stage investors in Q1 2020 at the onset of COVID-19, investors were unsure how an unprecedented crisis would impact their investments. In fact, the majority suggested that the pandemic will have a negative effect which could last up to two years.
Fast forward to Q1 2021, and those fears were largely dispelled as 2020 proved to be an overall banner year for the venture capital community, according to PitchBook, with companies raising $148 billion, as of December 14, 2020.
That sentiment was largely reflected in 500 Startups’ new survey on COVID-19’s impact on early stage investment. The firm polled 122 investors who identified as angel investors (49%) and venture capital firms (32%) and invest mainly in the seed stage.
The results indicated that investment activity remained largely resilient, with 38% of respondents investing in more startups than originally planned prior to COVID-19. Venture capital firms in particular (46%) reported an uptick in investment activity activity. Valuations were a surprise, with nearly half of investors saying they were higher than expected.
One reason for the turnabout in sentiment from Q1 2020 may be that investors didn’t want to miss out on deals, as companies continued to innovate. The last recession in 2008-2009 served as a reminder that great companies, such as Airbnb, Credit Karma and Uber were founded during a time of crisis.
Investors and founders forged ahead and learned to adapt to a virtual environment, with COVID-19 impacting sectors to varying degrees. Healthcare which has traditionally been slow to innovate saw a surge in interest from investors (42%), followed by remote work solutions (32%).
Going forward into 2021, investors intend to build on this momentum. To find out more about survey results, please click here.
500 Startups is one of the most active global early stage venture capital firms, with a mission to uplift people and economies around the world through entrepreneurship. Since its inception in 2010, 500 Startups has invested in over 2,500 companies across 78 countries. Its 140-plus team members are located in more than 17 countries to support 500 Startups' global portfolio. Notable investments include Credit Karma, Canva, Talkdesk, Intercom, GitLab, Grab and Bukalapak.
500 Startups also helps develop innovation ecosystems by partnering with governments and foundations to build tailored accelerator programs, and with corporations to facilitate relationships with startups. We also train investors through educational programs. 500 Startups has run more than 50 growth and accelerator programs for over 1,500 startups worldwide.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
