One would think it’s a given that investment strategies would change in the strange times we find ourselves. With the economy staggering and so much general uncertainty, it seems caution would be the watchword of the day, especially in the enterprise. But enterprise investors aren’t necessarily looking at what’s going on right now.
As startups make their way into the enterprise, they often grow from a single product to a platform offering, which means such investments tend to be a long haul that can take a decade or longer to mature and exit or IPO. The bigger the approach, the longer the sales cycle, so even though sales motion could be stalling now, it doesn’t mean VCs are just giving up on these types of investments.
Savvy investors understand that this is going to be a long game, and the current situation driven by a worldwide pandemic won’t necessarily change their approach significantly.
We asked a number of enterprise investors if they have changed their approach in light of the pandemic and its knock-on economic impacts, how the current environment has changed their relationship with existing portfolio clients and how well those clients are coping with the new reality.
- Theresia Gouw, Acrew Capital
- Diane Fraiman, Voyager Capital
- Casey Aylward, Costanoa Ventures
- Hope Cochran, Madrona Venture Group
- Leyla Seka, Operator Collective
- Max Gazor, CRV
- Navin Chaddha, Mayfield
- Matt Murphy, Menlo Venture Capital
- Soma Somasegar, Madrona Venture Group
- Jon Lehr, Work-Bench
- Steve Herrod, General Catalyst
- Jai Das, Sapphire Ventures
- Ed Sim, Boldstart Ventures
- Martin Casado, Andreessen Horowitz
- Vas Natarajan, Accel
- Dharmesh Thakker, Battery Ventures
[Editor’s note: Our prior enterprise survey failed to include any responses from female VCs and did not meet TechCrunch’s standards for diversity and inclusion. We regret the error.]
Theresia Gouw & Vishal Lugani, Acrew Capital
Note: These responses came from both partners.
With the pandemic having such a huge impact on the economy, how has this changed your investment approach and the types of companies you are more likely to invest in?
We remain committed to our five core thesis areas: security & infrastructure modernized, financial services rebuilt, work reimagined, data interconnected, and community activated. We break out each of our thesis areas into anywhere from 10-20 sub-sectors.
We have been continuously reprioritizing which sub-sectors will likely see business growth as well as opportunities to make a positive difference to a world grappling with COVID. There are still many unknowns and we closely watch company formation and funding to see where there might be particular concentration of entrepreneurial activity, which we take to be a positive sign that a market is robust and ready for significant investment.
Within enterprise software, we’ve unsurprisingly seen an acceleration in enterprise demand for communication and collaboration software. We’ve historically maintained a thesis that enterprise communication is an untapped, shadow set of data about workplace productivity and knowledge. With swaths of workers working remotely, capturing insights from these conversations provides a significant opportunity. This applies to industry verticals as much as it applies to functional software that sells across industries and focuses on a particular type of communication. We believe the key is that both employees and employers find these insights to be beneficial.
Lastly, we’ve also seen a growth in software and data that help enterprises navigate disruptions in supply, demand, or other aspects of their business.