WROCLAW, Poland– Venture capital funding in the United States rose by 33 percent during the COVID-19 pandemic, and only life sciences and pharmaceuticals companies witnessed growth, according to a report by Tooploox.
The report titled as “Disrupting the disruptors: How COVID-19 changed VC and startup reality” said that Venture Capital companies have continued to invest despite the looming crisis and revolutionary changes in daily business routines.
The overall COVID-related crisis has hit the retail and entertainment sectors hard, among others, disrupting routines and imposing a lockdown. On the other hand, e-commerce and online services have witnessed an unseen boom, with the rapid development of digital skills among new demographics and sectors that were once slow-adopters.
For the agile and high-tech-oriented ecosystem of startups and VCs, this new reality was unexpected, yet far from paralyzing, the report said.
Here are some key takeaways from the report:
- The VC ecosystem was prepared for a crisis to come. The general game-changer was the lockdown, not the economic slowdown.
- The number of investments in US startups has dropped by -30% when compared to 2019, but the average value of investments has risen up by +33%.
- Life sciences and pharmaceuticals are the only industries that have witnessed growth in the number of investments, the average value of investments, and the overall value of money raised.
- July has seen a +98% increase YoY in the average value of money invested by VCs, while in January the number, value, and average value have dropped, showing the initial shock of the COVID pandemic.
The VCs shared valuable info describing the new reality and how startup founders can find their way through it, considering the changes in investments – with VCs investing less frequently, but with more cash per funding, according to the report.
“One bit of evergreen advice is to do your homework first, get your key metrics and achievements together, such as your growth rates, revenue numbers, cohorts, user feedback, and customer testimonials,” says Jacek Łubiński, Principal at Market One Capital, as quoted in the report.
“We are proud and excited to hand over to the industry both qualitative and quantitative data that may help companies to understand the new world and adjust their operations to the new reality,” concludes Paweł Sołyga, Founder & CEO of Tooploox.
