Here Are the Investors Still Writing Checks During the Coronavirus Crisis
Ben Bergman is the newsroom's senior reporter, covering venture capital. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks. Follow him on Twitter.
These are scary times for investors and founders. A record bull market, more than a decade of ballooning valuations, and an ever expanding roster of venture capital deals of varying stripes all came to a screeching halt this month as the coronavirus pandemic spread across the world and brought the economy to a standstill.
VC deal flow is not like the public markets. One can't turn on CNBC and get an instant gauge of private markets, so it is impossible to know beyond anecdotes how VC activity has been impacted. But one thing many founders want to know is who is still out there writing checks and it seems a lot of people are, at least according to a list compiled by Laurent Grill, lead investor at corporate backed early stage fund, Luma Launch.
"You had founders who are freaking out because their assumption is no one is investing." Grill said. "But investors are investing."
Last week, Grill started emailing hundreds of fellow investors to see if they were still writing checks amidst the pandemic. He was originally trying to find the next round of capital for one his own portfolio companies but decided in the spirit of generosity to broaden his search and posted a query on LinkedIn. It ended up going viral and Grill's inbox was quickly flooded.
"When I posted this, I didn't expect to have 500 notifications," Grill told dot.LA last week. "It's pretty overwhelming because I'm not an influencer."
He has received 275 responses so far and the vast majority say they are still doing deals. (20% asked not to be included on the public list and he also excluded angel investors.)
Grill feels the results from his query are encouraging and he wants to publicize the fact that there are still plenty of opportunities amidst the doom and gloom. He also wants to facilitate the introductions that would normally happen at conferences and in-person meetings.
However, just because most everyone says they are still investing does not mean it is not going be a lot harder to get capital.
He suspects deals have significantly declined, though no one wants to completely shut their doors. There are optics to consider and also the fear of overlooking the next great unicorn. "We live in an industry of FOMO, because if people aren't investing they are worried they are going to miss a deal," Grill said.
725 companies came to Grill that said they are looking for financing and he has now partnered with FounderNest to help manage introductions. Other companies who want to be included should go here and investors who want to be part of the listing should fill out this form.
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When Christine Outram, founder and CEO of Everydae, a digital tutoring app, met with investors last year to try to raise a seed round she kept being told to come back in six months.
"I guess you can say we were turned down," she said.
Outram decided to try a different route, turning to equity crowdfunding, which allows mom and pop investors to dabble in something that until recently was solely the domain of professional investors. Her campaign proved successful – she raised $1.2 million from 1,586 people who wrote checks between $250 and $50,000.
Christine Outram, founder and CEO of Everydae, a digital tutoring platform.
Barbara Chandler believes she contracted COVID-19 in March at her job, working in an Amazon warehouse in New York where she experienced "a culture of workplace fear reinforced by constant technological supervision, retaliation against those who speak out, and the threat of automatic and immediate job loss in a job market where it may be impossible to find work elsewhere," according to a lawsuit filed in federal court in New York this week.
Less than a month after contracting the virus, Chandler says she woke up to find her cousin, whom she lived with, dead after experiencing COVID-19 symptoms.
At a virtual town hall held Thursday by dot.LA and PledgeLA to identify actions leaders in the L.A. tech and startup community can take now to break down racial barriers to jobs and capital, and to democratize economic opportunity for the region -- there were ultimately a robust number of questions asked and interest expressed around the issue, though tangible actions remain to be seen
Nearly 30 years after the 1992 riots in Los Angeles, protesters across the U.S. gathered this time to march against systemic racism and violence faced by the black community after George Floyd was killed while in police custody in Minneapolis.
Across social media, tech companies in L.A. and beyond have posted and tweeted their support for #blacklivesmatter, muted their feeds, and opened their pocketbooks, while music companies took part in a blackout. Companies have also donated to various diversity, equity and inclusion causes, but it remains an open question as to what impact those efforts will have.
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