To provide clarity amidst volatility, over a 72 hour period we surveyed 18 of the world’s leading growth investors — including Andreessen Horowitz, DST Global, General Catalyst, Greylock, IVP, Kinnevik, Naspers, Sequoia and Valar Ventures.
In our highlights deck we share their beliefs and expectations regarding COVID-19, the economy, investment appetite, priorities, valuations, strategy — and what they believe is misunderstood by founders. Highlights below - see the highlights deck for more, including our recommendations for founders.
• Investors expect COVID-19’s impact to be significant and sustained.
• Investors are pessimistic regarding the macroeconomic environment for the coming year. One in three expect a prolonged global recession; many believe the issue is finely balanced.
• Subject to valuation, appetite to invest is holding firm. New investments face greater headwinds than follow-ons. Investors are willing to look past weaker short-term performance for companies with structural growth opportunities.
• Software-as-a-service (SaaS), fintech and ‘deep tech’ prospects are favoured; investors are wary of propositions exposed to discretionary consumer spending.
• ‘Disruptors’ are not immune to valuation pressure. Public market software multiples have compressed 25%. Most scale-up investors anticipate reducing the valuations they offer — one in three, significantly. But investors entertain flexibility for the best-performing companies.
• Investors believe companies should re-prioritise profitability over growth — but six in ten see opportunities for profitable companies to invest for marketshare.
• According to investors, macroeconomic risk and the context for current valuations are most misunderstood by founders. Among investors, challenges posed by the changing dynamics of the business cycle are misunderstood, according to investor peers.