7 lessons learned by early-stage investors in 2020
The pandemic has affected the business world globally. The startup investors should follow certain protocols to perform better. They have realized that it was profitable to invest in the startups providing a wide range of sectors than the startups focusing on a specific sector.
Everybody would agree with the fact that 2020 has been the most unpredictable year. It somehow is reminiscent of the bubonic plague of 1665, also known as The Black Death which swiped away one-third of the population of Europe. What plague did to Europe, the pandemic Covid-19 is doing to the world. Be it people, businesses, startups, markets or investors, the pandemic has affected them all.
The pandemic encountered different kinds of responses from various sectors. Each one is struggling to survive through this crisis in their way. On one hand, it has mercilessly slaughtered hundreds of businesses. People lost their lives and jobs, some fought like a warrior but others lost everything to the pandemic. On the other hand, it paved the way for new startups to emerge.
The investors were hesitant and cautioned with their investment. A portion of the top-stage investors who had put their wagers on fragments, for example, travel and accommodation saw their ventures dissolve and took early precautions to handle the circumstance.There are seven lessons that they learned during the Pandemic.
Brainstorming is essential during a time of crisis. When the news of the crisis broke out, many of the early-stage investors called up their portfolio organizations. According to these investors, it is important to have a discussion with the portfolio startups and comprehend their circumstances and help them with the subsequent stages so business progression isn't affected.
Being a sector-agnostic is crucial as recognized by the early-stage investors.The portfolio delving with varieties of sectors can achieve success than startups focusing on a single goal. For instance, the startups who invested only in hospitality and travel suffered the loss.
Knowing the business thoroughly is the cardinal lesson. As an investor, you need to know the nature of business in and out. Your job is not to just extract money but also to make sure the profits are increasing and that can happen only when the investee company is performing well. If you, as an investor, acknowledge the business well then you would be able to assist it to sail through the crisis.
Digitization is pivotal as social distancing and lockdown have barred physical contact. Now every business be it small, medium or large, has to adapt and adopt the technology to keep their business running smoothly through the crisis. The pandemic has deranged the business like never before. The business world is in great need of technologies such as AI, ML, RPA to automate mechanical/semi-mechanical jobs.
Closing deals remotely is an option available now. There was a time when investors, particularly the early-stage ones, needed to hold a few rounds of face-to-face meetings with the startup founders before investing in the company. Nonetheless, 2020 has caused everybody to understand that distant working is effective. Some early-stage have had the option to make record bargains this year and raised record capital through Zoom and Google Meets. 2020 has made another workforce the executives framework with an alternate working encounter.
Think and work global is the new normal as many investors who were not willing to raise capital from LPS sitting abroad, 2020 proved to be a blessing in disguise for them. Along with the pandemic, the world has also shrunk as remote working has become the new trend of doing business.
Healthtech, e-commerce, and fintech are recognized as the top and most lucrative segment for investment in 2020. The reason being, this segment comes under the important services and were not affected by lockdowns imposed by the government all over the world. They flourished even more during the lockdown phase.