Related research from the Program on Corporate Governance includes Carrots & Sticks: How VCs Induce Entrepreneurial Teams to Sell Startups, by Jesse Fried and Brian Broughman (discussed on the Forum here); Do Founders Control Start-Up Firms that Go Public? by (discussed on the Forum here); and Do VCs Use Inside Rounds to Dilute Founders? Some Evidence from Silicon Valley by Jesse Fried and Brian Broughman (discussed on the Forum here).
In this paper, we survey over 1,000 institutional and corporate venture capitalists (VCs) at over 900 VC firms to learn how their decisions and investments have been affected by the COVID-19 pandemic. Understanding how COVID-19 impacted venture capital is important because many of the most innovative young companies depend on a steady inflow of VC money. The sudden arrival of the COVID-19 pandemic has dramatically affected many facets of the global economy, and many commentators worry this shock will choke off venture capital flow. VCs have variously described COVID-19 as the “Black Swan of 2020” and claimed the “global VC market has completely locked up.” If such dire predictions are true, that would have important consequences for the innovation ecosystem.
We measure the impact of COVID-19 using a survey of venture capitalists. Our results are based off answers by VCs who make up a significant fraction of the industry, including over 900 institutional VCs at over 800 VC firms and over 100 corporate VCs representing over 100 corporations. We compare their survey answers to those provided by a large sample of VCs in early 2016 and analyzed in Gompers, Gornall, Kaplan, and Strebulaev (2020), which allows us to see how COVID-19 has changed VC attitudes.
