Extra Crunch Friday: How 6 top VCs are adapting to the new uncertainty

Extra Crunch Newsletter

Friday, April 03, 2020 • By Walter Thompson

Welcome to Extra Crunch Friday Image Credits: MirageC / Getty Images The original headline for our latest investor survey was How top VC’s investing pace, focus, and outlook are changing. It wasn’t inaccurate, but it didn’t feel quite right. Everyone is finding their way, but the knock-on effects of the coronavirus pandemic are so massive, our poles are shifting. What do you do with a compass that no longer points north? After some mulling, How 6 top VCs are adapting to the new uncertainty seemed more appropriate. We reached out to several investors and heard back from: Duncan Turner (SOSV) Alex Doll (TenEleven Ventures) Paul Murphy (Northzone) Sean Park (Anthemis) Alex Niehenke (Scale Venture Partners) John Vrionis (Unusual Ventures) Their responses revealed three general trends, and it was reassuring to hear that the founders they work with are making proactive decisions — as opposed to waiting for instructions. Thanks for reading; stay safe this weekend.   Walter Thompson Senior Editor, TechCrunch @yourprotagonist Read more

How to value a startup in a downturn Image Credits: Angela Kotsell / Getty Images “What happens in the public markets trickles into the private markets,” observes Alex Wilhelm. In his interview with Bessemer Venture Partners investor Mary D'Onofrio (who helps run the Bessemer cloud index), he asked about how she values startups in volatile times and they “dug into how founders are reacting to the changing world that may no longer be as amenable to their business plans.” Read more

Join enterprise/SaaS seed investor Jonathan Lehr April 6 at 2pm EDT for a live conference call Sponsored by TechCrunch Lehr is co-founder and general partner of Work-Bench, one of NYC's top premier enterprise seed investors. Read more

What happens to edtech when kids go back to school? Image Credits: Joey Gannon / Flickr under a CC BY-SA 2.0 license. (Image has been modified) The coronavirus pandemic turned many working parents into harried homeschoolers, which has been a boon for remote-learning startups. To meet the new demand, many companies are offering deep discounts or free services, but reporter Natasha Mascarenhas found that edtech startups may have a hard time converting these eager new users into longtime (paying) customers once students return to campuses. Read more

A former chaos engineer offers 5 tips for handling online disasters remotely Image Credits: JW LTD / Getty Images Before Kolton Andrus was CEO of chaos engineering company Gremlin, he carried a pager for Amazon and Netflix, waiting for something to go wrong. “There were many nights where I had to spring out of bed at 2 a.m., rub the sleep from my eyes and work with my team to quickly identify the problem… working remotely makes the entire process more complicated if teams are not accustomed to it,” he says. Read more

Venture debt's new reality: "The last thing we want is management walking away from a company" Image Credits: xefstock Few startups were prepared for a global pandemic that has decimated the public and private markets. In times like these, “debt can prove much trickier,” writes Silicon Valley Editor Connie Loizos. She spoke to Waurice Werdegar, CEO of venture debt shop Western Technology Investment, to learn about options for founders who need to renegotiate debt payments. Read more

How bad will SaaS churn get in the downturn? Image Credits: Faisal Khan / NurPhoto / Getty Images Software as a service companies are a bellwether for economic downturns because churn rates tend to rise as customers seek to reduce their spending. Alex Wilhelm spoke to Crowdstrike CEO George Kurtz, Cathay Innovation co-founder Denis Barrier and Cledara co-founder Brad van Leeuwen to get a handle on what’s next. Read more

A bug bounty alone won't save your startup — here's why Image Credits: WhataWin / Getty Images Setting up a bug bounty program is an essential part of your internal testing process, but it’s critical that you manage it properly. Security reporter Zack Whittaker walked us through how to set up a vulnerability disclosure program that sets the rules of engagement for what can and can’t be tested and how payouts are managed. Read more

Lending startups are angling for new business from the COVID-19 economic bailout package Image Credits: kutaytanir / Getty Images Fintech companies hope to play a role in how some of the recently passed $2.2 trillion federal stimulus package will be distributed to entrepreneurs, but it’s unclear how — or if — non-bank lenders can participate. Will fintech startups be frozen out of the CARES Act? Read more

Visa's Africa strategy banks on startup partnerships Presenters mentioned Africa 28 times during Visa’s annual call, a clear signal that the financial leader is committed to tapping into the region’s massive payments ecosystem. We spoke with Visa's head of Strategic Partnerships, Fintech and Ventures for Africa, Otto Williams, and Aida Diarra, group general manager for Sub-Saharan Africa, about their collaboration strategy with local startups. Read more

SaaS growth appears to slow as churn concerns rise Image Credits: triloks We looked at data from nearly 20,000 subscription and SaaS companies to see how the COVID-19 slowdown is affecting a sector that’s historically known for driving steady growth and revenue. Read more

Longtime VC Neil Sequeira: funding founders without in-person meetings is 'quite difficult' “I'm actually hearing it from our companies who are in market that venture firms are looking around and trying to make a decision — probably for the first time — if they're going to lead a round to financing without actually having met the team. In this industry, that is a really hard thing to do because our business is all relationship-based.” Read our full Q&A with Defy co-founder Neil Sequeira. Read more

The pendulum will swing away from founder-friendly venture raises Image Credits: Janko Ferlič / Unsplash (Image has been modified) You don’t need a crystal ball to see that the short-term economic future looks rather bleak for founders who are looking to raise. Alex Wilhelm spoke to several VCs and dug into data from public and private markets to envision what’s coming down the line for valuations, down-rounds and SaaS churn. Read more

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