The covid-19 pandemic has disrupted business and home life. And in the venture capital community, the virus has shaken up how investors conduct business.
One noteworthy example has been meetings and how VCs and their LPs are holding meetings while staying safe and following lockdown protocols.
In May, Venture Capital Journal reported on a new and creative due diligence method that we were hearing more of: VCs taking social distance walks with founders and LPs.
Investors told us they began going on socially distanced walks with founders, and even some LPs, or meeting in the park and having a conversation six feet apart from each other. While there is some value in seeing founders in real life rather than on a screen via Zoom, , Michael Kim of Cendana Capital told us that the virtual approach is not as effective as normal social interaction.
On a similar note, we heard a lot of anecdotes about venture capitalists backing companies when they never met the entrepreneurs in person. The stories began to trickle in to us during the late spring and early summer, and by the time fall rolled around, VC firms investing in start-ups sight unseen became almost standard.
A few investors talked to VCJ about what it takes to conduct due diligence while working from home and having no physical interaction in a story published in mid-August.
VCs spoke of how they made a lot more reference calls, and extended the amount of time it took to conduct due diligence. Since investors weren’t flying around the country to meet potential portfolio companies, William Taranto, president of Merck Global Health Innovation Fund, said there was a big side benefit to the stay-at-home orders. The firm reduced its travel budget and closed its physical office.
At Menlo Ventures, partner Venky Ganesan said the firm was investing at its normal pre-pandemic pace. Although the due diligence on deals this year was conducted virtually, he said someone at the firm likely had met or known one of the founders in each company since before the lockdowns.
So there was already some in-person familiarity with each company, Ganesan told VCJ. That prior knowledge helped to finalize the deals, along with Zoom meetings and socially distanced walks, if necessary, he said.
Read more about pandemic-related stories in venture capital on VCJ‘s coronavirus page.