This is the first batch of insights that we’ve heard. More to come from other industries.
Private equity funds
Funds that are largely invested are on non-stop calls with their portfolio companies to ensure they have the liquidity to make it through the next several months, with Q2 serving as a major hurdle. If they are lucky enough to own assets that are experiencing strong tailwinds during the crisis (food and drug, healthcare, etc.), they are helping make decisions about capacity expansion to meet the demand surge.
Funds that are newly raised or minimally invested have a totally different reality. They may be dealing with a portfolio company or two, but they are focused on capitalizing on the deals that are likely to be had going forward:
- Companies that are strong but needing cash for a short while to make it through
- Other companies that will go to market with more realistic multiples than those we have seen over the last few years
The venture world will have its own set of challenges and opportunities throughout the crisis. Some cash-starved and site-based businesses have already fallen.
On the other hand, some venture investments may find these circumstances somewhat beneficial. Many enable a new digital world, one that now seems to be arriving even faster than before. On the investor management front, there is often significant variability on the timing of revenue, so a delay of a few months may be manageable for many.
Talent acquisition could go either way: in some respects, there will be lots of unemployment in the coming months, however, the type of people that startups need (young creative minds who help reimagine business models and get goods and services online) may be in shorter supply than usual as traditional businesses race to adapt.
One example of a business that’s benefiting is BEACON, an online mental-health services provider. BEACON has been working day and night to help as many people cope with this crisis as possible (full disclosure: BEACON is a client and SATOV investee).
We spoke with service providers such as ad agencies, lawyers, HR service providers, accountants, investment banks, and other consultancies about their own business and that of their clients. Their individual outlook depends very much on the client sectors they serve, but none are seeing a rise in volume during the crisis. Some have already made cuts, some are ‘bracing for impact’, and some are in a ‘wait and see’ mode.
In all cases, the type of service they offer is changing: quicker smaller projects, and small bits of advice that help clients quickly put out their fires.
What we’re doing
At SATOV, many of our current client discussions are about using this time to come out of the crisis stronger than ever, either with a revised strategy or a re-organized and more efficient operation. We are working hard to adapt our approach to be more remote but also quicker and more efficient.
For a list of adapted service offerings, click here.