LAVCA VC
  • News Feed
  • VC Data
  • Directories
  • Features
  • Tech Growth Coalition
  • LAVCA Gender Diversity
  • Engage
    • VC Council
    • VC Members
  • LAVCA
  • Member Login
  • Member Access

LAVCA VC

  • News Feed
  • VC Data
  • Directories
  • Features
  • Tech Growth Coalition
  • LAVCA Gender Diversity
  • Engage
    • VC Council
    • VC Members
  • LAVCA

AC Ventures: Navigating the Current Crisis

1 May 2020
AC Ventures Discussed How To Navigate Current COVID-19 Crisis

The following resource was shared with LAVCA by AC Ventures based on a communication they sent to their investors and partners. The statement reviews the current state of the global startup ecosystem and sheds light into challenges that both founders and investors will have to face moving forward.

Our response effort, like that of many, is focused first and foremost on the health and safety of our team. The priority, from day one, has been to follow all safety guidelines to ensure the well-being of all our team members, as well as the slowing of the spread of this disease. 

Having said that, most of our time during the past weeks has been spent on working on how to navigate the COVID-19 outbreak. We have communicated with numerous different players across the VC community, and although we are a couple of months into the crisis, we still wanted to share some insights and strategies we think may be of service.

First, when it comes to the general effects that can be expected from this crisis, there seems to be consensus in the VC community around three main points:

  1. Fewer deals and longer financing rounds: Times of economic uncertainty breed slow decision making. Investors are leaning towards a more conservative approach. Further, with self isolation and logistical challenges during this time, face-to-face meetings are not possible, which inherently slows deal flow. Presently, there has already been a slow down in deal flow, with investors decreasing the rate of capital deployment into new investments. 
  1. Lower valuations: Supply and demand in venture capital are shifting, quickly. Founders are worried, to say the least, and are likely to press for as much capital as they can get to navigate this uncertainty. Further, investors are raising the bar on new investments, some even halting new deal flow for the time being. 
  1. Time it will take for the economy to recover: In general, optimist consensus is that we can expect the economy to begin to recover in a year. Less optimistic players predict the downturn will be more prolonged, and that the economy will begin to recover in two years or even longer. Whatever the case may be, we encourage all players to plan for the worst case scenario.

Considering this, we have put together the following conclusions that may be of interest for the different players in the ecosystem:

For founders: 

In case you haven’t already heard it a thousand times in the past weeks, focus on extending your runway as much as possible. Last month, founders were being told to ensure a 12 month runway, at the least. Given recent happenings, however, this is not enough. Consider extending your runway to 24+ months. The worst thing that could happen is that you were too conservative. Remember, this is a time to focus on survival, retaining current clients, and growing with limited resources. Sequoia Capital’s Matrix for COVID-19 illustrates possible lockdown scenarios and potential strategies startups may implement, shown below: 

AC Ventures Discusses How to Navigate the COVID-19 Crisis
Source: Medium “Sequoia Capital’s Matrix for COVID-19“. 

For investors:

First and foremost, focus on your existing portfolio. As many investors in the community, our team at AC Ventures is committed to assisting our founders in any way possible, and working with them to help to achieve the desired runway extension and reduction of cash burn. Support is needed, now more than ever.

When it comes to new deals, while some of you may be inclined to pull out of investing during a downturn, history has shown us this may not be the best reaction. Some of the best companies have risen in the midst of an economic downturn, such as Uber, Google, and Amazon to name a few. 

While we most definitely do not encourage impetuous behavior, we do believe that there are opportunities to be taken from this time. Hence, as many investors in the ecosystem, we continue to actively look for investment opportunities, focusing on early-stage startups with solid teams, attractive business models and disruptive technologies remains. Further, we encourage everyone to exercise fairness when it comes to valuation, and to focus on building long-term relationships rather than taking opportunistic approaches. Finally, portfolio diversification is recommended to be a priority among all investors in order to lessen the effect of this global crisis.

We are aware these are difficult times for everyone. However, it is important to remember that humankind has proved to be resilient and adaptable during times of crisis. Some of the biggest innovations have come from moments of tremendous stress, and new opportunities arise from drastic changes in people’s lives. We are confident that we will all come out of this crisis stronger and continue to support each other along the way.

AC Ventures: Navigating the Current Crisis was last modified: May 12th, 2020 by cramos
AC VenturesCOVID-19downturnmacro scenariosSequioa CapitalVenture Capital
0
Facebook Twitter Google +

Methodology

LAVCA’s fourth annual list of Emerging Women Investors in Latin American Tech includes 135 junior- and mid-level investment professionals from Latin America-based firms, as well as from global firms with Latin America-dedicated investment teams.

Every year since 2016, LAVCA solicits nominations of top women investors in tech from the investment community. In 2018, complementing the peer nomination process, LAVCA reviewed the investment teams of all active Latin American VC funds. Our inaugural list of  Emerging Women Investors in Latin American Tech had 47 investors. The list has been constantly growing – from 87 investors featured in 2019, to 97 in 2020, and to 116 in 2021.

NOMINATE AN INVESTOR

This list is not exhaustive; if you know of a junior- or mid-level investment professional working on Latin American tech deals who should be on this list, contact [email protected]

TOP WOMEN INVESTING IN LATIN AMERICAN TECH

LAVCA’s companion list of Top Women Investors in Latin American Tech includes 140 senior-level women investment professionals who are deploying capital in early and growth stage tech deals.

About LAVCA

 

LAVCA is the Association for Private Capital Investment in Latin America, a not-for-profit membership organization dedicated to supporting the growth of private capital in Latin America and the Caribbean through research, education, networking and advocacy.

LAVCA Office

    New York City:
    589 8th Ave, 18th Floor
    New York, NY 10018

Explore LAVCA.org

  • About LAVCA
  • Board, Team, & Advisors
  • Media
  • Contact Us
  • Membership Benefits
  • Members Only Access
  • Education and Programs
  • Research
  • Policy
  • LAVCA VC
  • Contact Us

@2020 - LAVCA. All Rights Reserved.


Back To Top