Funding in the time of Corona Virus

Mark Suster
Mark SusterPartner, Upfront Ventures at Upfront Ventures
Funding in the time of
Coronavirus
Mark Suster
Managing Partner
Upfront Ventures
@msuster
We all woke up in February 2020 with a shock to the system
and with no idea what it means for our business or funding.
MarketWatch, CNN
Jan 13: First case of
COVID-19 detected
outside ChinaDec 12: Initial
cases occur in
Wuhan, China
Feb 22: Dow
Jones plummetsDow Jones US Total Stock Market Index
The market hates uncertainty and the market hates deflation
(why buy today what will be cheaper to buy tomorrow?).
Deflation
?
Today
Uncertainty1
2
OR
Time
Valuation
A $40M pre-money deal today may fund at $20M pre-money
in 6 months even if financial performance hasn’t changed.
(not saying it will, but it’s possible)
Time
Pre-$
$40M
$20M
10x Multiple
5x Multiple
(Valuation of $4M trailing twelve-month revenue)
“Valuation Compression” or
“Reversion to the Mean”
If markets stabilize relatively quickly, capital markets tend to
move past an initial sell-off (but this event feels different)
MarketWatch
Summer 2015
“Correction”
Dow Jones US Total Stock Market Index
20202013 2015 2017 2019
Covid 19
Initial Sell Off
Dec 2018
“Correction”
While nobody knows for sure what will happen, I think
coronavirus is more likely to be seen as a “Black Swan” event
(like 9/11) where the world will be very different as a result.
Spanish Flu, Mortality Rates (UK)
First Wave
Second Wave
Third Wave
1919
“Social distancing” widely accepted mitigation technique
which will dramatically hit certain sectors and impact the
most vulnerable people in our society.
Chain Restaurants:
$151B
Domestic Air Travel:
$145B
Hotels:
$205B
IBISWorld
Example Impacted Markets
But there are other factors at work that add to uncertainty
that should continue through 2020 and beyond. These are
just a few of them.
November 2020
Elections
BREXIT De-Globalization
Worldwide
Populism from
the Right & Left
1 2 3 4
Great business are built in good markets and bad markets.
Running out of cash is still the #1 reason companies go
bankrupt – so plan accordingly!
1999 - 2002 2007 - 2010
MarketWatch
Dow Jones US Total Stock Market Index
A look back at the last
decade and some thoughts
on the next 2 years.
After an 11 year bull run it has to be acknowledged that so
far this is just a blip. On the other hand, there is a lot further
it could fall …
Coronavirus
stock sell offDow Jones US Total Stock Market Index
MarketWatch
20202009 2012 2015 2018
Startup funding is up massively in the
past 15 years and this innovation will
persist …
VC funds have raised a lot of capital as
value has shifted from publics to
privates. They will still need to put $$
to work
2006 2008 2010 2012 2014 2016 2018
$137B
$29B
2006 2008 2010 2012 2014 2016 2018
$46B
$31B
$140B
$58B
Pitchbook
Seed valuations have doubled in this
period.
2006 2008 2010 2012 2014 2016 2018
$7M
$4.2M
2006 2008 2010 2012 2014 2016 2018
$29M
$10M
$8M
$25M
Early stage venture rounds valuations
have also gone up considerably.
Pitchbook
If public market valuations continue to decline it will undoubtedly come to private
markets. It takes longer to reset private valuations and those who don’t realize the
change may struggle to get funded.
There are more billion dollar-valued private companies now
than ever, which is a sign of how pervasive the tech sector
has become and the value of “privates.”
3 4 4
9
11 12
42 43
22
34
54
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Pitchbook
Number of 1B+ Companies Created
The public markets FAANG company stock has become a
major driver of our overall public returns in the past decade.
MarketWatch, pulled March 3, 2020
It’s fair to say that the past
decade has been amazing
for startups and VCs.
But …
If public markets continue to decline and VC funding is
affected, you can expect VCs to first focus on their existing
portfolio companies first - “Triage.”
Photo credit: Thomas Hawk on VisualHunt / CC BY-NC
In a tough
environment
funding is like
constipation,
nothing gets
through.
Pixabay
When uncertainty passes VC funds have plenty of dry capital
to put to work. In a zero interest rate environments LPs will
continue to seek yield.
$0
$10
$20
$30
$40
$50
$60
$70
2009 2010 2011 2012 2013 2014 2016 2017 2018 2019
Pitchbook
US VC, Total Capital Raised ($B)
So your job is to stay funded past this initial phase of
portfolio triage and uncertainty.
t = ?
3 - 18 months
Funding markets
Revenue /
Cash Balance
In a war of attrition, history rewards the early and decisive
actions. It sounds easy, of course it isn’t. But everybody says
“we’re cutting into muscle” – you seldom are.
CASH BURN
+
There are some reasons the tech industry should maintain
its optimism.
100
230
293
1999 2013 2019
250
2800
4574
1999 2013 2019
World Bank, Internet World Stats, Pitchbook, Industry Ventures
US Internet Users
(Millions)
Global Internet Users
(Millions)
Connection speed in 2019 is a whopping 2000 times faster
than that in 1999.
1999 2014 2019
United States
(Avg. Speed, Mbps)
50
Kbps
11.1
96.3
Akamai’s State of the Internet, Statista, Ookla
Nearly everybody now has a computer in their pocket.
1999 2013 2019
United States
Smartphone penetration
N/A
Global N/A
56% 79%
22% 42%
Newzoo, GSMA, Statista, Business Insider
We’re all connected – when concepts work, they scale much
faster and become much more dominant than at any point in
human history.
0
500
1000
1500
2000
2500
1999 2013 2018
Monthly Active Users (Millions)
33 130 218 236
1,189
186
1,000
326
1,057
2,271
Upfront Analysis
With everybody’s credit cards or banks now connected to
tech platforms, we’ve eliminated most purchase friction.
We’re one tap away from buying online.
0
100
200
300
400
500
600
700
800
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Total Active Users (Millions)
*
*Amazon user data is estimated as straight line from IPO (1997) to 2018 reported values
Source: Upfront Analysis, PayPay, Loup Ventures, BigCommerce
Most industry analysts haven’t even begun to comprehend
what an enormous shift 5G speeds will bring. We anticipate
enormous creative destruction and company creation.
< 1
Mbps
4
Mbps
25
Mbps
3G
2G
4G
5G
?
Note: Represented AT&T’s average 3G an 4G download speed. 5G networks have the potential to be significantly faster but data is only
available from simulated environments. RootMetrics, Wikipedia, Upfront analysis
The world is aging rapidly as birth rates decline. We will
become more reliant on technology to drive productivity, not
less.
What we fear – drones,
robots, automation, AI: will
be strategic imperatives to
feed the world.
If this is a Black Swan, you
must shore up cash now.
When chaos is obvious
everybody hits the market at
the same time.
Business Insider / Reuters / Duane Tanouye
If it’s not a Black Swan
event the worst case
scenario is you were overly
conservative.
THANK YOU
1 of 32

Recommended

Startup funding : bootstrapping vs fundraising by
Startup funding : bootstrapping vs fundraisingStartup funding : bootstrapping vs fundraising
Startup funding : bootstrapping vs fundraisingFrance Digitale
151.8K views64 slides
5 Pitch Deck Mistakes That Can Keep You From Getting Funded by
5 Pitch Deck Mistakes That Can Keep You From Getting Funded5 Pitch Deck Mistakes That Can Keep You From Getting Funded
5 Pitch Deck Mistakes That Can Keep You From Getting FundedDeck Works
49.6K views43 slides
Notation II Pitch Deck by
Notation II Pitch DeckNotation II Pitch Deck
Notation II Pitch DeckNotation Capital
58.7K views14 slides
Long Journey Ventures Fund 1 - VC Pitch Deck Example by
Long Journey Ventures Fund 1 - VC Pitch Deck ExampleLong Journey Ventures Fund 1 - VC Pitch Deck Example
Long Journey Ventures Fund 1 - VC Pitch Deck ExamplePitch Decks
7.1K views25 slides
Founders Factory overview August by
Founders Factory overview AugustFounders Factory overview August
Founders Factory overview AugustTechMeetups
1K views18 slides
Kleiner Perkins Fund 18 by
Kleiner Perkins Fund 18Kleiner Perkins Fund 18
Kleiner Perkins Fund 18Kleiner Perkins
41.1K views35 slides

More Related Content

What's hot

Seed stage 2019 final by
Seed stage 2019   finalSeed stage 2019   final
Seed stage 2019 finalMark Suster
49.4K views19 slides
KP19 by
KP19 KP19
KP19 Kleiner Perkins
5.7K views32 slides
The Helpful VC (June 2019) by
The Helpful VC (June 2019)The Helpful VC (June 2019)
The Helpful VC (June 2019)Dave McClure
1.7K views14 slides
Seedcamp Fund V Fundraising Deck by
Seedcamp Fund V Fundraising DeckSeedcamp Fund V Fundraising Deck
Seedcamp Fund V Fundraising DeckSeedcamp
57.7K views31 slides
Hack fund pitch deck by
Hack fund pitch deckHack fund pitch deck
Hack fund pitch deckRenata George
726 views30 slides
Notation: Pre-seed Investing & Risk by
Notation: Pre-seed Investing & RiskNotation: Pre-seed Investing & Risk
Notation: Pre-seed Investing & RiskNotation Capital
2.2K views20 slides

What's hot(20)

Seed stage 2019 final by Mark Suster
Seed stage 2019   finalSeed stage 2019   final
Seed stage 2019 final
Mark Suster49.4K views
The Helpful VC (June 2019) by Dave McClure
The Helpful VC (June 2019)The Helpful VC (June 2019)
The Helpful VC (June 2019)
Dave McClure1.7K views
Seedcamp Fund V Fundraising Deck by Seedcamp
Seedcamp Fund V Fundraising DeckSeedcamp Fund V Fundraising Deck
Seedcamp Fund V Fundraising Deck
Seedcamp57.7K views
Notation: Pre-seed Investing & Risk by Notation Capital
Notation: Pre-seed Investing & RiskNotation: Pre-seed Investing & Risk
Notation: Pre-seed Investing & Risk
Notation Capital2.2K views
From 0 to 500 Million ARR in 6 years: Learnings from Innovating in Underserve... by saastr
From 0 to 500 Million ARR in 6 years: Learnings from Innovating in Underserve...From 0 to 500 Million ARR in 6 years: Learnings from Innovating in Underserve...
From 0 to 500 Million ARR in 6 years: Learnings from Innovating in Underserve...
saastr194 views
Delivering Outstanding VC Results with DA by Ulu Ventures
Delivering Outstanding VC Results with DADelivering Outstanding VC Results with DA
Delivering Outstanding VC Results with DA
Ulu Ventures3K views
SURGE Ventures Series Seed & "A" Fund Pitch Deck by Kirk Coburn Surfing
SURGE Ventures Series Seed & "A" Fund Pitch DeckSURGE Ventures Series Seed & "A" Fund Pitch Deck
SURGE Ventures Series Seed & "A" Fund Pitch Deck
OATV Fund III Pitch Deck by Bryce Roberts
OATV Fund III Pitch DeckOATV Fund III Pitch Deck
OATV Fund III Pitch Deck
Bryce Roberts24.1K views
Alternative Sources Of Funding For Creative Technology Business by gcecs2009
Alternative Sources Of Funding For Creative Technology BusinessAlternative Sources Of Funding For Creative Technology Business
Alternative Sources Of Funding For Creative Technology Business
gcecs20091.7K views
Decision Analysis in Venture Capital Workshop, DAAG 2019 by Ulu Ventures
Decision Analysis in Venture Capital Workshop, DAAG 2019Decision Analysis in Venture Capital Workshop, DAAG 2019
Decision Analysis in Venture Capital Workshop, DAAG 2019
Ulu Ventures3.1K views
Seedcamp Fund IV Fundraising Deck by Seedcamp
Seedcamp Fund IV Fundraising DeckSeedcamp Fund IV Fundraising Deck
Seedcamp Fund IV Fundraising Deck
Seedcamp86.6K views
Vc fund raising & pitch deck outline by The Rudder Group
Vc fund raising & pitch deck outlineVc fund raising & pitch deck outline
Vc fund raising & pitch deck outline
The Rudder Group4.9K views
The New York Venture Capital Almanac by CAR FOR YOU
The New York Venture Capital AlmanacThe New York Venture Capital Almanac
The New York Venture Capital Almanac
CAR FOR YOU8.3K views
Investment Thesis Fundamentals (April 2016) by Dave McClure
Investment Thesis Fundamentals (April 2016)Investment Thesis Fundamentals (April 2016)
Investment Thesis Fundamentals (April 2016)
Dave McClure131K views
Irish Technology Capital-European Technology Venture Fund - John Hartnett - S... by Burton Lee
Irish Technology Capital-European Technology Venture Fund - John Hartnett - S...Irish Technology Capital-European Technology Venture Fund - John Hartnett - S...
Irish Technology Capital-European Technology Venture Fund - John Hartnett - S...
Burton Lee1.4K views
Susa Ventures - Fund IV - VC Pitch Deck Examples by Pitch Decks
Susa Ventures - Fund IV - VC Pitch Deck ExamplesSusa Ventures - Fund IV - VC Pitch Deck Examples
Susa Ventures - Fund IV - VC Pitch Deck Examples
Pitch Decks10.5K views
Corporate VC - Qualcomm Ventures by StartupAlliance
Corporate VC - Qualcomm VenturesCorporate VC - Qualcomm Ventures
Corporate VC - Qualcomm Ventures
StartupAlliance3.2K views

Similar to Funding in the time of Corona Virus

The Black Swan Event: Funding in the time of Coronavirus with Mark Suster by
The Black Swan Event: Funding in the time of Coronavirus with Mark SusterThe Black Swan Event: Funding in the time of Coronavirus with Mark Suster
The Black Swan Event: Funding in the time of Coronavirus with Mark Sustersaastr
163 views41 slides
M&A Capital Market Update Q1 2021 by
M&A Capital Market Update Q1 2021M&A Capital Market Update Q1 2021
M&A Capital Market Update Q1 2021Jarred Olson
235 views15 slides
SVB State of the Markets Report Q1 2017 by
SVB State of the Markets Report Q1 2017SVB State of the Markets Report Q1 2017
SVB State of the Markets Report Q1 2017Silicon Valley Bank
1K views25 slides
Blockchain Capital's 2019 Year in Review by
Blockchain Capital's 2019 Year in ReviewBlockchain Capital's 2019 Year in Review
Blockchain Capital's 2019 Year in ReviewKinjal Shah
956 views74 slides
Isvcstillathing final-190204194013 by
Isvcstillathing final-190204194013Isvcstillathing final-190204194013
Isvcstillathing final-190204194013Sirlei de Fatima Barreiro Jabali
33 views41 slides
Dorado Industries TrendWatch 2.0 Q2 2016 Industry Synopsis by
Dorado Industries TrendWatch 2.0 Q2 2016 Industry SynopsisDorado Industries TrendWatch 2.0 Q2 2016 Industry Synopsis
Dorado Industries TrendWatch 2.0 Q2 2016 Industry SynopsisDorado Industries
208 views20 slides

Similar to Funding in the time of Corona Virus(20)

The Black Swan Event: Funding in the time of Coronavirus with Mark Suster by saastr
The Black Swan Event: Funding in the time of Coronavirus with Mark SusterThe Black Swan Event: Funding in the time of Coronavirus with Mark Suster
The Black Swan Event: Funding in the time of Coronavirus with Mark Suster
saastr163 views
M&A Capital Market Update Q1 2021 by Jarred Olson
M&A Capital Market Update Q1 2021M&A Capital Market Update Q1 2021
M&A Capital Market Update Q1 2021
Jarred Olson235 views
Blockchain Capital's 2019 Year in Review by Kinjal Shah
Blockchain Capital's 2019 Year in ReviewBlockchain Capital's 2019 Year in Review
Blockchain Capital's 2019 Year in Review
Kinjal Shah956 views
Dorado Industries TrendWatch 2.0 Q2 2016 Industry Synopsis by Dorado Industries
Dorado Industries TrendWatch 2.0 Q2 2016 Industry SynopsisDorado Industries TrendWatch 2.0 Q2 2016 Industry Synopsis
Dorado Industries TrendWatch 2.0 Q2 2016 Industry Synopsis
Dorado Industries208 views
As current growth rates reach a new low, competition for the future is on the... by SimCorp
As current growth rates reach a new low, competition for the future is on the...As current growth rates reach a new low, competition for the future is on the...
As current growth rates reach a new low, competition for the future is on the...
SimCorp137 views
A Case - Cognizant - Built to Excel by Kamales Mandal
A Case - Cognizant - Built to ExcelA Case - Cognizant - Built to Excel
A Case - Cognizant - Built to Excel
Kamales Mandal4.5K views
4Q20 Forbes Market Update by Sara Cody
4Q20 Forbes Market Update4Q20 Forbes Market Update
4Q20 Forbes Market Update
Sara Cody143 views
White Star Capital Canadian Venture Capital Landscape 2019 by White Star Capital
White Star Capital Canadian Venture Capital Landscape 2019White Star Capital Canadian Venture Capital Landscape 2019
White Star Capital Canadian Venture Capital Landscape 2019
White Star Capital2.3K views
Gafanomics - The Quarterly - Episode 2 (Q2FY19) by Fabernovel
Gafanomics - The Quarterly - Episode 2 (Q2FY19)Gafanomics - The Quarterly - Episode 2 (Q2FY19)
Gafanomics - The Quarterly - Episode 2 (Q2FY19)
Fabernovel3.3K views
The State of FinTech and the Time-Honored Rivalry Between Incumbents and Star... by F-Prime Capital
The State of FinTech and the Time-Honored Rivalry Between Incumbents and Star...The State of FinTech and the Time-Honored Rivalry Between Incumbents and Star...
The State of FinTech and the Time-Honored Rivalry Between Incumbents and Star...
F-Prime Capital255 views
H1 2015 Venture Capital Financing in Canada by Amir Bashir
H1 2015 Venture Capital Financing in CanadaH1 2015 Venture Capital Financing in Canada
H1 2015 Venture Capital Financing in Canada
Amir Bashir4.6K views
U.S. Technology Funding -- What's Going On? by a16z
U.S. Technology Funding -- What's Going On? U.S. Technology Funding -- What's Going On?
U.S. Technology Funding -- What's Going On?
a16z849.9K views
The Future of Marketplaces Report by Speedinvest
The Future of Marketplaces ReportThe Future of Marketplaces Report
The Future of Marketplaces Report
Speedinvest71 views

More from Mark Suster

Managing Your Startup Board by
Managing Your Startup BoardManaging Your Startup Board
Managing Your Startup BoardMark Suster
93.5K views43 slides
Is vc still a thing final by
Is vc still a thing   finalIs vc still a thing   final
Is vc still a thing finalMark Suster
1.7M views41 slides
Staff at vc firms by
Staff at vc firmsStaff at vc firms
Staff at vc firmsMark Suster
29.2K views1 slide
ICO 2.0 Summit - Keynote Presetnation by
ICO 2.0 Summit - Keynote PresetnationICO 2.0 Summit - Keynote Presetnation
ICO 2.0 Summit - Keynote PresetnationMark Suster
47K views27 slides
Upfront Ventures Bitcoin & Blockchain VC Survey by
Upfront Ventures Bitcoin & Blockchain VC SurveyUpfront Ventures Bitcoin & Blockchain VC Survey
Upfront Ventures Bitcoin & Blockchain VC SurveyMark Suster
41.9K views18 slides
Upfront Ventures blockchain and crypto deck by
Upfront Ventures blockchain and crypto deckUpfront Ventures blockchain and crypto deck
Upfront Ventures blockchain and crypto deckMark Suster
73.2K views56 slides

More from Mark Suster(20)

Managing Your Startup Board by Mark Suster
Managing Your Startup BoardManaging Your Startup Board
Managing Your Startup Board
Mark Suster93.5K views
Is vc still a thing final by Mark Suster
Is vc still a thing   finalIs vc still a thing   final
Is vc still a thing final
Mark Suster1.7M views
Staff at vc firms by Mark Suster
Staff at vc firmsStaff at vc firms
Staff at vc firms
Mark Suster29.2K views
ICO 2.0 Summit - Keynote Presetnation by Mark Suster
ICO 2.0 Summit - Keynote PresetnationICO 2.0 Summit - Keynote Presetnation
ICO 2.0 Summit - Keynote Presetnation
Mark Suster47K views
Upfront Ventures Bitcoin & Blockchain VC Survey by Mark Suster
Upfront Ventures Bitcoin & Blockchain VC SurveyUpfront Ventures Bitcoin & Blockchain VC Survey
Upfront Ventures Bitcoin & Blockchain VC Survey
Mark Suster41.9K views
Upfront Ventures blockchain and crypto deck by Mark Suster
Upfront Ventures blockchain and crypto deckUpfront Ventures blockchain and crypto deck
Upfront Ventures blockchain and crypto deck
Mark Suster73.2K views
Fundstrat Bitcoin & Blockchain presentation for Upfront Summit by Mark Suster
Fundstrat Bitcoin & Blockchain presentation for Upfront SummitFundstrat Bitcoin & Blockchain presentation for Upfront Summit
Fundstrat Bitcoin & Blockchain presentation for Upfront Summit
Mark Suster94.6K views
Upfront Ventures VC Survey 2017 by Mark Suster
Upfront Ventures VC Survey 2017Upfront Ventures VC Survey 2017
Upfront Ventures VC Survey 2017
Mark Suster56.4K views
Upfront LP Survey of the Venture Capital & Startup Industry by Mark Suster
Upfront LP Survey of the Venture Capital & Startup IndustryUpfront LP Survey of the Venture Capital & Startup Industry
Upfront LP Survey of the Venture Capital & Startup Industry
Mark Suster53.9K views
Upfront State of the VC & Tech Industry 2017 by Mark Suster
Upfront State of the VC & Tech Industry 2017Upfront State of the VC & Tech Industry 2017
Upfront State of the VC & Tech Industry 2017
Mark Suster58.5K views
Final LA tech and venture landscape by Mark Suster
Final LA tech and venture landscapeFinal LA tech and venture landscape
Final LA tech and venture landscape
Mark Suster42.8K views
Final san diego venture group keynote 2016 by Mark Suster
Final san diego venture group keynote   2016Final san diego venture group keynote   2016
Final san diego venture group keynote 2016
Mark Suster161.8K views
Final upfront lp survey data 2016 by Mark Suster
Final upfront lp survey data 2016Final upfront lp survey data 2016
Final upfront lp survey data 2016
Mark Suster46.9K views
VC survey data 2016 by Mark Suster
VC survey data 2016VC survey data 2016
VC survey data 2016
Mark Suster119K views
Final venture outlook 2016 by Mark Suster
Final venture outlook 2016Final venture outlook 2016
Final venture outlook 2016
Mark Suster548.9K views
There is Something Going on in the LA Tech Market by Upfront Ventures by Mark Suster
There is Something Going on in the LA Tech Market by Upfront VenturesThere is Something Going on in the LA Tech Market by Upfront Ventures
There is Something Going on in the LA Tech Market by Upfront Ventures
Mark Suster65.9K views
The Changing Structure of the Venture Capital Industry by Mark Suster
The Changing Structure of the Venture Capital IndustryThe Changing Structure of the Venture Capital Industry
The Changing Structure of the Venture Capital Industry
Mark Suster106.8K views
Why It's Morning in Venture Capital by Mark Suster
Why It's Morning in Venture CapitalWhy It's Morning in Venture Capital
Why It's Morning in Venture Capital
Mark Suster112.7K views
Final web summit (dublin oct 2013) by Mark Suster
Final web summit (dublin oct 2013)Final web summit (dublin oct 2013)
Final web summit (dublin oct 2013)
Mark Suster40.7K views
Online video market sept 2013 by Mark Suster
Online video market sept 2013Online video market sept 2013
Online video market sept 2013
Mark Suster62.9K views

Recently uploaded

Discover the Finest Interior Painting Services in Miami Elevate Your Space wi... by
Discover the Finest Interior Painting Services in Miami Elevate Your Space wi...Discover the Finest Interior Painting Services in Miami Elevate Your Space wi...
Discover the Finest Interior Painting Services in Miami Elevate Your Space wi...Florida Painting Miami
9 views10 slides
Supercharge & Make Your Business Searchable on Google.pptx by
Supercharge & Make Your Business Searchable on Google.pptxSupercharge & Make Your Business Searchable on Google.pptx
Supercharge & Make Your Business Searchable on Google.pptxIMSeoKing.com
7 views35 slides
valuation firm. by
valuation firm.valuation firm.
valuation firm.NandniDhyani
10 views2 slides
Popup Company Profile by
Popup Company ProfilePopup Company Profile
Popup Company ProfilePopup Agency
7 views18 slides
Episode 258 Snippets: Rob Gevertz of First Five Yards by
Episode 258 Snippets: Rob Gevertz of First Five YardsEpisode 258 Snippets: Rob Gevertz of First Five Yards
Episode 258 Snippets: Rob Gevertz of First Five YardsNeil Horowitz
40 views58 slides
Lexington Quartzite Countertops Elegance Redefined by
Lexington Quartzite Countertops Elegance RedefinedLexington Quartzite Countertops Elegance Redefined
Lexington Quartzite Countertops Elegance RedefinedGranite Depot of Lexington
7 views6 slides

Recently uploaded(20)

Discover the Finest Interior Painting Services in Miami Elevate Your Space wi... by Florida Painting Miami
Discover the Finest Interior Painting Services in Miami Elevate Your Space wi...Discover the Finest Interior Painting Services in Miami Elevate Your Space wi...
Discover the Finest Interior Painting Services in Miami Elevate Your Space wi...
Supercharge & Make Your Business Searchable on Google.pptx by IMSeoKing.com
Supercharge & Make Your Business Searchable on Google.pptxSupercharge & Make Your Business Searchable on Google.pptx
Supercharge & Make Your Business Searchable on Google.pptx
IMSeoKing.com7 views
Episode 258 Snippets: Rob Gevertz of First Five Yards by Neil Horowitz
Episode 258 Snippets: Rob Gevertz of First Five YardsEpisode 258 Snippets: Rob Gevertz of First Five Yards
Episode 258 Snippets: Rob Gevertz of First Five Yards
Neil Horowitz40 views
Motorcycle - Scooter license plate holder.pdf by JAWADIQBAL40
Motorcycle - Scooter license plate holder.pdfMotorcycle - Scooter license plate holder.pdf
Motorcycle - Scooter license plate holder.pdf
JAWADIQBAL40177 views
RESIDENTIAL CARPENTRY SERVICES – COLOR RENOVATION INC by colorrenovation
RESIDENTIAL CARPENTRY SERVICES – COLOR RENOVATION INCRESIDENTIAL CARPENTRY SERVICES – COLOR RENOVATION INC
RESIDENTIAL CARPENTRY SERVICES – COLOR RENOVATION INC
colorrenovation18 views
TNR Gold Shotgun Gold Project Presentation by Kirill Klip
TNR Gold Shotgun Gold Project PresentationTNR Gold Shotgun Gold Project Presentation
TNR Gold Shotgun Gold Project Presentation
Kirill Klip85 views
Reports and Filters Basics_BLG Basics.pdf by Bloomerang
Reports and Filters Basics_BLG Basics.pdfReports and Filters Basics_BLG Basics.pdf
Reports and Filters Basics_BLG Basics.pdf
Bloomerang161 views
Government Plans to Decrease Minimum Export Price of Basmati Rice to 950tonne... by Piyush Tradologie
Government Plans to Decrease Minimum Export Price of Basmati Rice to 950tonne...Government Plans to Decrease Minimum Export Price of Basmati Rice to 950tonne...
Government Plans to Decrease Minimum Export Price of Basmati Rice to 950tonne...

Funding in the time of Corona Virus

  • 1. Funding in the time of Coronavirus Mark Suster Managing Partner Upfront Ventures @msuster
  • 2. We all woke up in February 2020 with a shock to the system and with no idea what it means for our business or funding. MarketWatch, CNN Jan 13: First case of COVID-19 detected outside ChinaDec 12: Initial cases occur in Wuhan, China Feb 22: Dow Jones plummetsDow Jones US Total Stock Market Index
  • 3. The market hates uncertainty and the market hates deflation (why buy today what will be cheaper to buy tomorrow?). Deflation ? Today Uncertainty1 2 OR Time Valuation
  • 4. A $40M pre-money deal today may fund at $20M pre-money in 6 months even if financial performance hasn’t changed. (not saying it will, but it’s possible) Time Pre-$ $40M $20M 10x Multiple 5x Multiple (Valuation of $4M trailing twelve-month revenue) “Valuation Compression” or “Reversion to the Mean”
  • 5. If markets stabilize relatively quickly, capital markets tend to move past an initial sell-off (but this event feels different) MarketWatch Summer 2015 “Correction” Dow Jones US Total Stock Market Index 20202013 2015 2017 2019 Covid 19 Initial Sell Off Dec 2018 “Correction”
  • 6. While nobody knows for sure what will happen, I think coronavirus is more likely to be seen as a “Black Swan” event (like 9/11) where the world will be very different as a result. Spanish Flu, Mortality Rates (UK) First Wave Second Wave Third Wave 1919
  • 7. “Social distancing” widely accepted mitigation technique which will dramatically hit certain sectors and impact the most vulnerable people in our society. Chain Restaurants: $151B Domestic Air Travel: $145B Hotels: $205B IBISWorld Example Impacted Markets
  • 8. But there are other factors at work that add to uncertainty that should continue through 2020 and beyond. These are just a few of them. November 2020 Elections BREXIT De-Globalization Worldwide Populism from the Right & Left 1 2 3 4
  • 9. Great business are built in good markets and bad markets. Running out of cash is still the #1 reason companies go bankrupt – so plan accordingly! 1999 - 2002 2007 - 2010 MarketWatch Dow Jones US Total Stock Market Index
  • 10. A look back at the last decade and some thoughts on the next 2 years.
  • 11. After an 11 year bull run it has to be acknowledged that so far this is just a blip. On the other hand, there is a lot further it could fall … Coronavirus stock sell offDow Jones US Total Stock Market Index MarketWatch 20202009 2012 2015 2018
  • 12. Startup funding is up massively in the past 15 years and this innovation will persist … VC funds have raised a lot of capital as value has shifted from publics to privates. They will still need to put $$ to work 2006 2008 2010 2012 2014 2016 2018 $137B $29B 2006 2008 2010 2012 2014 2016 2018 $46B $31B $140B $58B Pitchbook
  • 13. Seed valuations have doubled in this period. 2006 2008 2010 2012 2014 2016 2018 $7M $4.2M 2006 2008 2010 2012 2014 2016 2018 $29M $10M $8M $25M Early stage venture rounds valuations have also gone up considerably. Pitchbook If public market valuations continue to decline it will undoubtedly come to private markets. It takes longer to reset private valuations and those who don’t realize the change may struggle to get funded.
  • 14. There are more billion dollar-valued private companies now than ever, which is a sign of how pervasive the tech sector has become and the value of “privates.” 3 4 4 9 11 12 42 43 22 34 54 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Pitchbook Number of 1B+ Companies Created
  • 15. The public markets FAANG company stock has become a major driver of our overall public returns in the past decade. MarketWatch, pulled March 3, 2020
  • 16. It’s fair to say that the past decade has been amazing for startups and VCs. But …
  • 17. If public markets continue to decline and VC funding is affected, you can expect VCs to first focus on their existing portfolio companies first - “Triage.” Photo credit: Thomas Hawk on VisualHunt / CC BY-NC
  • 18. In a tough environment funding is like constipation, nothing gets through. Pixabay
  • 19. When uncertainty passes VC funds have plenty of dry capital to put to work. In a zero interest rate environments LPs will continue to seek yield. $0 $10 $20 $30 $40 $50 $60 $70 2009 2010 2011 2012 2013 2014 2016 2017 2018 2019 Pitchbook US VC, Total Capital Raised ($B)
  • 20. So your job is to stay funded past this initial phase of portfolio triage and uncertainty. t = ? 3 - 18 months Funding markets Revenue / Cash Balance
  • 21. In a war of attrition, history rewards the early and decisive actions. It sounds easy, of course it isn’t. But everybody says “we’re cutting into muscle” – you seldom are. CASH BURN +
  • 22. There are some reasons the tech industry should maintain its optimism. 100 230 293 1999 2013 2019 250 2800 4574 1999 2013 2019 World Bank, Internet World Stats, Pitchbook, Industry Ventures US Internet Users (Millions) Global Internet Users (Millions)
  • 23. Connection speed in 2019 is a whopping 2000 times faster than that in 1999. 1999 2014 2019 United States (Avg. Speed, Mbps) 50 Kbps 11.1 96.3 Akamai’s State of the Internet, Statista, Ookla
  • 24. Nearly everybody now has a computer in their pocket. 1999 2013 2019 United States Smartphone penetration N/A Global N/A 56% 79% 22% 42% Newzoo, GSMA, Statista, Business Insider
  • 25. We’re all connected – when concepts work, they scale much faster and become much more dominant than at any point in human history. 0 500 1000 1500 2000 2500 1999 2013 2018 Monthly Active Users (Millions) 33 130 218 236 1,189 186 1,000 326 1,057 2,271 Upfront Analysis
  • 26. With everybody’s credit cards or banks now connected to tech platforms, we’ve eliminated most purchase friction. We’re one tap away from buying online. 0 100 200 300 400 500 600 700 800 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Active Users (Millions) * *Amazon user data is estimated as straight line from IPO (1997) to 2018 reported values Source: Upfront Analysis, PayPay, Loup Ventures, BigCommerce
  • 27. Most industry analysts haven’t even begun to comprehend what an enormous shift 5G speeds will bring. We anticipate enormous creative destruction and company creation. < 1 Mbps 4 Mbps 25 Mbps 3G 2G 4G 5G ? Note: Represented AT&T’s average 3G an 4G download speed. 5G networks have the potential to be significantly faster but data is only available from simulated environments. RootMetrics, Wikipedia, Upfront analysis
  • 28. The world is aging rapidly as birth rates decline. We will become more reliant on technology to drive productivity, not less.
  • 29. What we fear – drones, robots, automation, AI: will be strategic imperatives to feed the world.
  • 30. If this is a Black Swan, you must shore up cash now. When chaos is obvious everybody hits the market at the same time. Business Insider / Reuters / Duane Tanouye
  • 31. If it’s not a Black Swan event the worst case scenario is you were overly conservative.