The Top Tier Response to COVID-19

Like many around the world, TTCP is actively adapting to the ever-changing work environment, which has become our new norm. It’s during unique times like these that we, as institutional investors, are trusted by our Limited Partners to remain ahead of the market, and invest their capital responsibly. To do so, TTCP has conducted update meetings with managers and compiled data to provide our supporters with a snapshot of how venture firms are measuring COVID-19’s impact on the industry, responding to this new environment, and how we at Top Tier plan to navigate today’s market.

COVID-19’s Impact on the Venture Market

While it was impossible to anticipate the COVID crisis in early 2019, the market largely recognized the likelihood of an upcoming correction, and many of the industry’s leading managers took preemptive steps to lessen the blow of an impending downturn including:

  1. 2019 was characterized by colossal fundraises for market-leading companies and venture funds alike, providing many companies with sufficient runway, and dry powder to reach an all-time high 
  2. Venture funds typically discount public valuations by up to 30%, lessening the decrease to fund performance

Regardless of how venture funds prepared, no one was equipped for what some have characterized as the most unique economic event in history (Courtesy of Scale Ventures). While a worldwide recession of this magnitude and velocity hasn’t been experienced in the past, the immediate market impacts largely resemble that of previous recessions:

  1. An accelerated emphasis on attractive margins and sight to profitability, building (Read more...)