VCs break down their portfolio by deciding who to help in priority in the face of the economic crisis caused by Covid-19. Large funds like Sequoia, Benchmark or Kleiner Perkins, should come out without scratching but the “limited partners” could freeze their investments in funds with less established performances.
Faced with the economic crisis caused by the Covid-19, the venture capital funds of Silicon Valley have only one word to say: breakdown of the portfolio. All the associates review the start-ups in which they have invested to decide who to help first. “ They sort into three categories: companies that have enough liquidity to last twelve to eighteen months, those that lack it but whose model is not called into question, and those that the crisis shakes the most violently. », Summarizes Romain Serman, director of bpi Investment in the United States.
« The companies that were planning to raise in a month or two, we tell them to do it now. Then it will become almost impossible. We are activating our contacts in larger firms to complete the next round but responses are slow at the moment », Says Prashant Fonseka, partner of Tuesday VC, a seed fund that has invested between 250,000 and 500,000 dollars in 170 active start-ups. “ Entrepreneurs must get the attention of investors, who are like hospitals that distribute ventilators. They know there won’t be enough for everyone Says Carlos Diaz, partner of The Refiners, an accelerator in San Francisco.