Over Half of VCs Have Stopped or Cut Down Investments, Survey Finds
CTech – More than half of venture capital firms have halted or reduced their activity in light of the coronavirus (Covid-19) pandemic, a new survey shows. Over the past week, Israeli customer research startup Wizer Feedback Ltd. surveyed 131 venture capital funds and corporate venture arms on how their activity will be impacted by the ongoing crisis.
A quarter of the participating VCs responded that they intend to completely stop investments in the near future. Another 32 percent said they will invest less. Only 5 percent of the funds said they intend to increase their investment activity, while 17 percent said they would continue to invest as usual. The remaining 21 percent said they did not know how their activity would be affected.
In a Wednesday call with Calcalist, Dov Yarkoni, CEO of early stage incubator and investment fund Nielsen Innovate, gave his insights on the current investment climate.
According to the survey, VCs believe that the health industry will be the biggest beneficiary from the crisis, with the gaming, analytics, and data sectors also mentioned as likely to emerge from the coronavirus crisis as winners.
“The survey showed a trend of increased interest in investing in fields that are searching for solutions for the problems we are dealing with in this crisis: investment in health-related technologies, and on the other hand investment in gaming,” Oron said. “We can expect a moderation in this trend and that investors will very quickly return to be interested in companies that solve problems and improve processes in normal times and not just during crises.”
According to the survey, 78 percent of those questioned would recommend startups to cut their expenses immediately, freeze recruitment and keep a close eye on cash flow.
Dov Yarkoni believes companies should put employees on leave without pay. “The next three months will be crucial,” he noted. “Every company which has cash needs to assume that it won’t be able to raise money over the next 12 months.”