Fifth Era/Blockchain Coinvestors Update #11
We are living in difficult times and we would like to begin by wishing you and your family good health and well-being.
We should of course talk about the likely impact of the Global Corona Crisis on the long term prospects for blockchain technology businesses and investing.
At this time we do not know the short term or long term implications of Coronavirus and we don’t believe anyone else does either. Looking back at 2008 and 2001, quality venture capital firms had some of their greatest successes in the midst of the Global Financial Crisis and the earlier Dotcom Crash. The reasons were several:
Marginal companies and investors found it harder to move forward and many companies went out of business unable to secure follow-on financing
Conversely, the leading and best capitalized firms were able to make sure their own portfolios held up much better
Valuations fell, and investors benefited from better terms and conditions on start-up funding and even more so on follow-on rounds especially when the companies were in financial distress
The financial crises did not change the reality that new technologies and innovations were the driver of economic value creation and over the long term very successful companies emerged from the short term wreckage of those earlier crises
The list of unicorns emerging from the 2008 crisis is impressive. As examples, Airbnb, Cloudera, Dropbox, Github, Glassdoor, MongoDB, Slack, Square, Tumblr, Twilio, Uber, and Yammer were all formed in the darkest hours of the Global Financial Crisis.
However, Coronavirus is not only a financial crisis, and we are in the midst of it. We can’t be sure by any means, but we expect this time around:
Many of the same impacts will be felt as in 2008/9
We hope that our funds, which are the leaders in the field, will be able to weather the storm better than most and will derive benefits as marginal companies and investors leave the field
We are concerned that in the short term, those of our funds that have liquid token holdings, including in Bitcoin, will see a fall in their NAV reported to us (some funds hold their called but un-invested cash in Bitcoin and/or Ethereum, while others hold some liquid tokens as investments).We are pleased to see the quickness with which most of them have engaged with their portfolio companies to make sure they are able to weather the storm and we moved quickly to send to them the Sequoia portfolio company guidance so that they could create similar versions of their own.
The best of the blockchain venture capital firms understand this history and are moving to ensure that they have portfolio companies that are prepared for the downturn, and that they themselves have dry powder in their own funds to take advantage of the crisis.
Recent Developments in Technology & Business
We wanted to share both an example of how some are trying to take advantage of all of us in this crisis, and conversely how others are trying to help us through it:
BEWARE: Fake Coronavirus Map Steals Passwords & Personal Information with Computer Virus
Covid-19: Implications for Business
Webinars:
We recently posted our latest Blockchain Coinvestors webinar on Mastering Early Stage Investing at www.blockchaincoinvestors.com/webinars.
Please join us for an upcoming webinar by clicking on any of the following links:
March 30th, 7am PSTMarch 30th, 12pm PSTApril 13th, 7am PSTApril 13th, 12pm PSTMay 4th, 7am PSTMay 4th, 12pm PST
Also visit us at www.blockchaincoinvestors.com to find more information and request the investor presentation.
Recent Podcast Appearances:
On the Brink Podcast: Investing in Blockchain Venture Capital Funds
TEC Live - Business Leadership Insights
We know these are very troubling times, and we wish you and your family good health and well-being to finish as we began.
Best wishes,
Alison Davis
Matthew C. Le Merle