How COVID recession is affecting our startups.

I just wrote an article on what steps founders can take now to prepare for the downturn. As investors, it will be great if we can remind them on the various topics they need to think about. Beyond that, we can also give morale support by recognizing the stress they are under and also being patient as they come to terms with the new situation.

One interesting thing is that as Ning & I start surveying our startups to get a sense of the impact of the recession and their plans, we realize that our strategy of not having a fixed area or industry and our strategy to go for more conservative founders seems to be working well even with the COVID stresses. Of course, there is also an element of luck at play. Here's an interesting summary. Most of the VCs we know have also done this with their portfolio.

Out of 23 startups who replied.

New Revised Revenue for this year compared to original projection

same and up - 5
0% to -25% - 8
-25 to - 50% - 6
>-50% - 4

Cashflow runway with new scenario projections

> 20 mths - 14
12-20 mths - 4
<12 mths - 5

So while we can see that definitely the bulk of startups are affected by downturn in a big way on revenues, we are happy to note that most of them just raised their latest round last 6 months and so still have a lot of runway to tide through this tough period. We are focusing on the 9 which only have less than 20 mths to see if we can help extend their run way via loans if it makes sense.  Unfortunately, we do anticipate 1-2 failures next 6 months.

Hope this sharing is useful!