"Covid-19 has Compressed VC's Vision of 5 Years into 5 Months"
Covid-19 has brought about a paradigm shift across industries, and venture investing is no exception. The pandemic and ensuing lockdowns have influenced consumer behaviour and preferences majorly, may be even permanently in some cases.
To understand how the investment landscape has transitioned amidst the Covid-19 pandemic and its impact on long-term investing, Entrepreneur India interacted with Vinnie Lauria, founding partner, Golden Gate Ventures, an early-stage venture capital (VC) firm in Southeast Asia. Lauria shared his views on the nitty-gritty of investments along with the bounce back plan for businesses.
Impact of Pandemic on Investment and Bounce Back Approach
Most of the work operations continue to be remote in Singapore and Indonesia despite lifting of lockdown restrictions. “In a market like Indonesia, people are working from home and locked down. There were certain presumptions about bounce back in a short time-frame,” says Lauria.
It is essential for term investors to check the growth level of companies and that their growth plans for the next decade has to be reflected over, he added.
Even though economies across the world have been hit by the pandemic, certain verticals, such as edtech and healthtech, have grown due to this phase.
VCs look upon trends, growth plan and future of the company while making an investment decision. However, COVID-19 has compressed the vision of five years into five months. At the same time, the growth scale has become swift over the past few months, especially for digital businesses. For instance, online education, grocery, health and tech startups have grown immensely, gaining from the opportunity in the market.
Investment Prospects During the Pandemic
Vinnie said that even during the pandemic, investments on both existing as well as new projects are being made. Lauria said, “At Golden Gate, we’ve been doing one investment per month and the process has changed significantly.” In sectors like e-commerce, health, grocery, education and payment, companies are not only growing rapidly but also raising ample capital.
Switching to video calls has been one of the major changes to execute meetings for investments, Lauria said.
It has become much simplified to understand mistakes in the work as everyone is evolving similarly. Nevertheless, the approach to address these issues is quite different and as a VC, being progressive and consistently changing are essential, he added.
Addressing Parameters of Virtual Pitch
Even amidst Covid-19, conversational parameters need to remain the same. On the other hand, background information is being leveraged to get more reference points in the virtual pitch. Parameters such as growth rate, attraction, retention and behaviour analytics remain the same.
Lauria said, “Travel for new investment is going to be hard for at least two years and a new line of business will be helpful.”
Tips for Startups for an Effective Virtual Pitch
Vinnie believes it’s important for startups to evaluate the portfolio of the investor and focus on due diligence before going for the pitch. Seeking feedback from the colleagues and peers will be beneficial to ask questions.
Body language and getting signals on the video screen should be worked upon during the virtual pitch. “Trimming the presentation is ideal to engage the investor on video call rather than long duration slides,” pointed Lauria.
Being prepared with the market insights and knowing the competitors to ensure the investment plan works in a two way offers pragmatic outcome. According to Lauria, the factors like expectations, portfolio of founders, their knowledge, alignment stage and their growth plans must be pondered over during the investment meeting.
Identifying Cross Border Movement for Startups
Singapore, Hong Kong and Taiwan markets weathered cross border movement considerably.
Lauria said, “Switching to new market in a different country from home market is really difficult.” He further added that it will be worth learning from the stumbling blocks in order to enter into new markets.
Powering Southeast Asia with Growing Use of Software
Software is changing the landscape of Southeast Asia entirely during the COVID-19 scenario.
Currently, there are several apps which have made inventory management quicker and checking availability of goods and payments through app have made the work mechanism efficient. In fact, most of the companies are digitizing to improve efficiency and in terms of finance, digital payments can be accepted easily.
Lauria pointed out that WhatsApp, WeChatpay, Alipay, and Amazon are some of the tools that will be used by small shops in the coming years. Most of all, the target audience will beyond hyperlocal deliveries to countrywide accessibility.
Keeping Business Afloat During Covid-19 Crisis
Lauria suggested slash marketing, salary deductions, gradual cuts, subscription email services and partnerships as some of the tactics companies or startups can deploy to make their business sustainable during the Covid-19 pandemic. Outsourcing freelancers and a different approach towards executing business operations will be recommended for the organizations, he added.