Venture capital firms focused on Asia are feeling the effects of a crippling coronavirus pandemic which has led fundraising in the first quarter of 2020 to reach a seven-year low.
VC firms raised just $2.2 billion in the quarter, according to recent data from U.K., in the midst of a pandemic that has now infected over 1.4 million individuals and claimed 82,119 lives.
Investors are not only struggling to raise capital but are urging startups to assume such conditions to persist and to rein in on costs in the meantime. Sequoia Capital India’s managing director GV Ravishnakar told startup founders in a video conference last week to cut spending «quickly and deeply», according to a «Nikkei» report.
Global Trend
Headwinds for venture capital appear to apply broadly across the world with another survey by «500 Startups» – a VC firm invested in 2,300 companies in more than 75 countries – illustrating similarly weak sentiments. Over two-thirds of respondents – mostly VC firms or angel investors – expected to be hit with 32 percent claiming negative impact and 36 percent claiming somewhat negative impact. Most expect the impact to last one to two years.
Still, there were silver linings with increased interest in sectors such as healthcare (46 percent) remote work solutions (42 percent) logistics (32 percent) and productivity software (28 percent). What’s more, 53 percent plan to invest in the same stages as before the crisis and 26 percent stated they would maintain original allocations.
