by Riley Freeman — Axis Innovation | April, 5 2020
5 Key Takeaways from the Axis Investor Webinar
The past few weeks have brought unprecedented change to the world and the global startup ecosystem. Entrepreneurs and investors in all fields are facing challenges and uncertainty which they may never have had to deal with before, as they search for the best strategies to get them through the months ahead.
For that reason, we ‘virtually’ gathered four leading international investors — Shelly Porges, co-founder and managing partner of the Billion Dollar Fund for Women and Beyond the Billion; François Paulus, co-founder and partner at Breega Capital; Jonathan Tudor, innovation director at Centrica Ventures; and Adam Eisenberg, partner at Ibex Investors — to share their insights and advice for founders to manage and get through this challenging period in the strongest way. Here are 5 key takeaways from Axis Webinar: Global Investors — Where are we going?:
1. Cash is king
In such an uncertain time, a business needs to give itself the best chance of continuing its operations without major cash flow concerns. For that reason, entrepreneurs need to recognise the value in having cash now. To this end, Adam Eisenberg pointed out that startups need not to be over-ambitious with their valuations. They rather need to be realistic and be ready to make a deal if there is a reasonable offer on the table. François Paulus agreed — asserting that a startup should accept money while it can, rather than declining a VC who wants to negotiate.
2. Be willing to adapt:
Both investors and entrepreneurs need to be creative at such a time. For example, making use of digital meetings is a must as a way to connect, even though we naturally would want in-person meetings when it comes to closing deals. Beyond that, companies must be creative in what they offer. Shelly Porges mentioned a number of companies who pivoted their original product and are now creating solutions relevant to the Coronavirus. New mobile ventilators, accelerated virus testing, and AR/VR methods of healthcare training were the main examples she gave of solutions by companies who are being dynamic in the current times.
3. It’s a good time to invest — and also a bad time:
When there is uncertainty, people try to look for clear answers. However, the reality is we don’t know how long markets will be impacted, and we can’t be sure exactly who will do well and who will not. As an illustration, Jonathan Tudor — who focuses on energy investments — pointed out that there will be a shift in energy usage now, as home usage is surging but retail, restaurants, events and similar fields are dramatically down in usage. This may cause problems for the energy industry, but may also lead to a greater sense of urgency in finding better ways to use energy. Therefore, the possibility of the market accelerating over time is still present. François shared his insights into the Fintech and Insurtech industry, which is truly a mixed opportunity. Some companies are seeing huge increases in usage, while others — such as on-the-spot automotive insurance — are having a difficult time now.
4. Investors will still invest:
Despite all the uncertainty, investors need to find a way to deploy their capital. The likelihood of some returns going down over time is now high, but the adverse effects of this have to be mitigated through intelligent use of funds in the long term. All panelists still expressed the need to meet in person in order to be a lead investor in a round, even if they have set all the groundwork through online meetings and exchanges. Additionally, Jonathan noted that he would have a tendency to trust the lead investor when it comes to their decisions at this time. Therefore, if there is a minority investor who sees that the lead is confident enough to go ahead with deals despite the circumstances, they are likely to follow this lead and continue with their investment too.
5. It’s not all bad:
This point has gradually become noticeable through the takeaways above. The investors indicated that this could be a time of opportunity, with Shelly emphasising that those who recognise this and are proactive will do really well in coming out of this period with their companies in a reasonably strong position. It may also be that spending in certain industries will simply be reallocated after the resumption of normality, rather than completely lost, allowing for some level of recovery according to Adam. Finally, it is notable that customers will greatly appreciate companies who lean in and help out at a time of crisis, which represents another opportunity.
The road ahead is rather uncertain, but it is no use to sit and wait. To the question of ‘Where are we going?’, we have to say: We don’t fully know. But we need to keep going. Communication between parties will be key. Proactive steps will be vital. And seeking opportunity out of adversity will get you as close as possible to where you want to go. Axis Webinars had a fantastic start, and the insights will continue to flow in the coming weeks.