Venture Capitalists and COVID-19

By: Paul A. Gompers, Will Gornall, Steven N. Kaplan and Ilya A. Strebulaev

Format:Print
| Language:English

Abstract

We survey over 1,000 institutional and corporate venture capitalists (VCs) at more than 900 different firms to learn how their decisions and investments have been affected by the COVID-19 pandemic. We compare their survey answers to those provided by a large sample of VCs in early 2016 and analyzed in Gompers, Gornall, Kaplan, and Strebulaev (2020). VCs have slowed their investment pace (71% of normal) and expect to invest at 81% of their normal pace over the coming year. Not surprisingly, they have devoted more time to guiding the portfolio companies through the pandemic. VCs report that 52% of their portfolio companies are positively affected or unaffected by the pandemic; 38% are negatively affected; and 10% are severely negatively affected. Overall, they expect the pandemic to have a small negative effect on their fund internal rates of return (IRRs) (-1.6%) and multiples on invested capital (MOICs) (-0.07). Surprisingly, we find little change in the allocation of their time to helping portfolio companies relative to looking for new investments. In general, we find only modest differences between institutional and corporate VCs.

Keywords

Venture Capital; Health Pandemics; Investment; Decision Making; Surveys

Citation

Gompers, Paul A., Will Gornall, Steven N. Kaplan, and Ilya A. Strebulaev. "Venture Capitalists and COVID-19." NBER Working Paper Series, No. 27824, September 2020.