In this period of personal, economic, and business uncertainty, focus has shifted from growth to survival.

The perennial optimism of venture capitalists is put to test by the pandemic, which has prompted many VCs to rethink their strategy, fortify the due diligence, and overcome the dilemma in investment performance.

Let’s understand the changes that are afoot already in the venture capital industry and future predictions as well. Here is a quick primer on how the COVID-19 crisis is changing the venture capital investment strategy.

VC INVESTMENT: LESSONS FROM THE 2008 CRISIS

A few of the pointers for existing and new venture capitalists from the 2008 crisis as said by global leaders (excerpts from SEI ventures study report):

Downturns are quicker, deeper, and may last longer. Run a business while anticipating all downside scenarios.

Control the controllable, i.e., expenses, and have a neutral outlook on new sales until there is a better economic climate change.

Have enough cash to weather the storm. Flexibility is the key.

Save the most likely first. Get prepared to make the hard decision of not investing more time and capital when a company is not worth saving.

Engage with entrepreneurs in many ways other than venture capital like customers and product development.

Test unit economics, leadership, resiliency, and adaptability of the business plan and model.

VC INVESTMENT: EARLY EFFECT OF COVID-19

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