To understand the effects of the COVID-19 outbreak on the venture capital sector, we recently conducted a survey of venture firms to gauge investor sentiment on investment activity and fundraising. Within a few days, 427 venture firms responded, demonstrating the strong desire to share information across the venture community.
Some key observations:
- 81% of respondents plan to do two or fewer investments per quarter in 2020 compared to only 56% in 2019.
- On average, nearly 70% of fund portfolio companies have at least 12 months of cash, a surprisingly high number in our findings, albeit perhaps a function of burn reductions recently executed at most companies.
- A majority of respondents expect valuations will drop over 21% across stages and geographies.
- Only 20% of respondents are modifying reserve targets; and those who are doing so are also boosting their reserve ratio by about 25%.
- Are funds that are raising — or planning to raise — reducing (target) fund size? Nearly 40% are.
- For those fundraising and planning on fundraising in 2020, nearly half of sub-$50MM funds are expecting to downward modify their fundraising target.
- Silicon Valley funds are least likely to modify fund target down, while ~50% of funds outside of U.S. are planning on downshifting their fund target.
To read the findings of the survey, download the report below. We hope that this helps you form a perspective on industry trends, and we look forward to hearing from you on how this aligns with your observations and strategy.