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How VC-backed companies in the UK will survive COVID-19

How VC-backed companies in the UK will survive COVID-19 - Outsized returns from companies often come from agile businesses that can fundamentally change and improve consumer behaviour, especially during times of hardship and uncertainty. While COVID-19 has adversely impacted the global tech world, it has also shifted the market landscape and left plenty of opportunities for start-ups to disrupt. So how will these next generation-defining technology companies emerge from the pandemic crisis?

Whilst lots of venture capital-backed start-ups have failed in recent times and the economy has buckled under coronavirus, many technology start-ups have thrived amid adversity. Companies and VC firms have begun to plot a futuristic strategy for dealing with COVID-19 so that not only their existing investments are secure, but so they can remain in the market, preserve capital and still achieve growth in uncharted seas.

According to Alexis Gray, VC Analyst, Dale W Wood:

“There is an overwhelming opinion among venture capital firms that a large amount of money is waiting to be invested. Learning from history, like the Dot Com bubble bursting two decades ago, this could be a great time to invest. These times of lesser liquidity and dislocated markets seem to offer better and big investment chances. 

Now here is a catch. Of course, there is a large reserve of capital waiting to be invested, but investment coming only from the VC industry is not sustainable in the long run. Conventional capitalization options such as bank financing too have to open coffers. If VCs keep on spending the same rate, they will soon run out of the capital. 

It is for this reason that the VC industry is slowing down its efforts and intensity of capitalization. It is also making changes in the distribution of capital. Industry wants to preserve its reserve until the end of the pandemic.” 

The cracks in the business wall are more visible during Covid-19, so it makes sense that there’s an increase in the scrutiny of a start-up company’s flexibility and stability. This scrutiny will become more prominent in workforce management, service/ product, demand-supply chain, technology adoption, and customer service.  Most of these practices have become the norm in recent times and will remain the same, even after the pandemic ends. Companies adopting these practices now will get a clear head start in the investment race.

It is right now that many companies will be engaging with experienced objective advisers to support them during this period to ensure a level of objectivity and structure. Before we can start to plan a survival strategy, businesses need to have the full spectrum of knowledge of just how the pandemic has affected your business until now, and whether they can realistically remain operational and profitable as we navigate through the coming months.

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The Business Company, has over a decade of experience in this field, and we are keen to support our economy across The Marches/ West Midlands. We are offering a free ½ day initial analysis to support businesses from all sectors who would welcome support.

 

References

https://born2invest.com/articles/covid-19-changed-vc-landscape/