The 5 things VC advise their portfolio companies to do during global crisis

The 5 things VC advise their portfolio companies to do during global crisis

As part of the UK Fintech Week 2020 hosted by Innovate Finance, a panel discussion, titled “The 5 things VC advise their portfolio companies to do during global crisis, featured Michele Foradori, Investor BlackFin, Jay Wilson, Investment Managerm Albion Capital, Oliver Richards, Partner, MMC Ventures, Maria Wagner, Investment Directo, Beringea and Charles McManus, Group Chief Executive Officer, Clear Bank Group, with Sonya Barlow, Founder, Like_Minded Females moderating the session.

The panel discussion touched on the VC’s reflection of the challenges and opportunities, resulting from the COVID 19 situation, some of the best practices and advices from both investors and entrepreneur’s perspectives. The discussion wrapped up with five key words, reflecting the main themes of the discussion. These are Leadership, Culture, Cash, Ultra-Flexibility and Transparency.

Key takeaways from the discussion are summarized below.

  • Challenges and Opportunities from COVID 19
    • In Fintech segment, B2B or those that rely on selling solution to large financial insitutiton are likely to face slowdown, new deals are hard to come by
    • The crisis does open door for opportunities for certain business model by accelerating the technolgocy development, as well as acceleration of technological adoption. Example of the tech solution that would benefit from COVID 19 include EdTech, Remote Working, HealthTech for example.
    • For the VC, new deals will be chanlleged by the ability to conduct due diligence and to agree on the terms and conditions. Although it’s business as usual at VC, most deals are those that have been negotiated pre-Covid. New deals are possible, but would likely take longer time to see how the event unfolds.
  • How do VC support their portfolio companies during this time?
    • Spend times with their portfolio companies bring clarity on purpose, refine their business model what they need to do to get through the crisis, focus on activities that drive growth and at the same time eliminate activities that are not so successful in the past.
  • What could be done to improve or save the portfolio companies during this time?
    • Take care of employees and people in the team in terms of their job, health and family. They will be the ones leading you out of the crisis
    • Conserve cash – Look internally. How could you generate cash? Save costs / Re-evaluate the business model and current unit economics / work out from bottom up to achieve the minimum viable cost base that would allow the business 18-24 months run way. This is not just an exercise. It should be taken to the core to allow business to survive through the crises.
    • Be creative, adaptative and flexible
    • Focus on your customer, support their needs and be relevant to their changing requirement
  • What do you see in the best in class entrepreneur of your portfolio companies?
    • Be transparent and honest
    • Working closely with teams across companies
    • 4 management traits shared by Charles
    • Decide with speed over precision/keep iterating and evolving. Concentrate on fewer things that really move the needle.
    • Adapt Boldly – focus on what we are not going to do. Throw away yesterday’s playbook. Staying close to customers to adapt.
    • Reliably deliver – align the team focus / deliver / metrics Mind and body – keep everybody in shape/ motivation / talk and unity
    • Engagement for impact – new ways to engage, motivate and communicate – pulse check

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