Fear In Silicon Valley About COVID-19 Crisis Among Entrepreneurs And VCs

NFX, a leading VC firm in the San Francisco Bay Area, that is focused on start-ups that benefit from network effects, has released a study of 286 early stage entrepreneur/founders and 114 venture capitalists delving into the feelings of these two groups about the future of start-ups and venture capital in the COVID -19 environment. Click below for a free copy of the April 3 report.

Survey report can be found here

Both groups of people were asked when they thought the U.S. will recover from the COVID-19 crisis. Not surprisingly, the VCs were considerably less optimistic than the founders. The founders were actually rather optimistic. Just over one-third of the founders said we would “recover” by September of 2020, but only 16% of VCs felt that way. Strikingly, almost 40% of the VCs said the recovery would occur between April 2021 thru April 2022, but two-thirds of the founders felt the recovery would be before April 2021.

Comparing Attitudes of Founders and Venture Capitalists about the end of the COVID-19 crisis — Start-up founders and venture capitalists say when they believe the COVID-19 crisis will end. – GETTY

Founders are super worried about this crisis. Over 51.7% of them said they were very or extremely worried about the crisis. Another 25% said they were moderately worried. You wonder who the 8.4% of the founders are who felt “not worried” at all.

Founders describe their state of worry about the COVID-19 crisis. — How worried are founders about the COVID -19 crisis? – NFX

Founders have plenty to worry about. The two biggest concerns of founders were about venture funding drying up and about sales declining.

Founders worry about venture money, sales, morale, etc. — Founders’ biggest concerns about the COVID-19 crisis. – NFX

The venture capitalists indicate that they will be slower to deploy their investment funds into start-ups. A majority of VCs say that their investment deployment rate will be 60-80% of the rate that existed previous to the crisis.

Venture capitalists will slow the rate at which they deploy investment funds. — Slowing rate of deployment of investments in start-ups due to the COVID-19 crisis – NFX

This study is a super recent look at how start-up founders and how venture capitalists feel about their businesses due to the COVID-19 Crisis. Read the full study to better understand what start-ups are doing to reduce their costs, the impact on hiring, as well as what founders are doing to improve their physical and mental states. Those and many other pertinent subjects are covered in this report from NFX.