The Pandemic A Year Later: Lessons On Predicting Venture Outcomes

This article was originally published on Forbes here.

The start of each new year brings various predictions for what the year in venture will look like. So it’s timely to ask ourselves, “How reliable are such predictions?” To answer this question, I looked at my own predictions for 2020 and how those compared to what actually happened during the balance of the year. To be fair, mine were made in early April 2020 at the beginning of the pandemic, but they still called for sizable changes in the venture landscape.

My predictions for 2020 were based on our team’s analysis of the last two tech downturns, as well as my own experience in venture investing over the last twenty years. We also factored in the newly emerging pandemic into our six predictions:

  1. 30% drop in VC investing
  2. 30% drop in Series A investments
  3. Meaningful drop in Series A valuations
  4. A “flight to quality” in private markets
  5. This downturn would make a “beeline for main street”
  6. This downturn would force a change in how enterprise sales would be done

One of our assumptions was that the venture industry had developed its own pattern of behavior, and that it would react in a way that was consistent with how it did in prior downturns. With a few notable caveats, four out of our six predictions appear to have been correct. The reaction of VC firms to the economic downturn caused by the COVID-19 pandemic appears to show relatively consistent behavior over cycles if we (Read more...)