13 Boston-focused venture capitalists talk green shoots and startup recovery

Welcome back to the second half of our two-part Boston investor survey.

Catching you up, TechCrunch reached out to a host of Boston-area venture capitalists to get their take on the current state of their market, and what they think might be coming up in the future. More VCs than we initially anticipated got back to us, so we broke the survey into two pieces so that there was enough room to include everyone.

Today, in contrast, we’re looking a little further ahead: Are they seeing green shoots? When is a recovery likely to begin? What’s making them feel hopeful in this tenuous era? Here’s who took part:


Boston VC’s vision of tomorrow

Recovery is going to be slow, but most importantly, the comeback is not going to look like one, sole aha moment for any startup or entrepreneur. After poring through dozens of responses, we distilled that Boston-focused VCs think that recovery will favor Boston-area companies to some degree, as the areas they are working on, or the problems that they are working to solve, will still matter after COVID-19.

On the slowness of recovery, NextView’s Rob Go provided TechCrunch with the most vivid prognostication, saying that “while it’s difficult to predict” when the post-COVID recovery will begin, he anticipates “a swoosh-shaped recovery is more likely” than anything V-shaped. “The recovery is likely to be painfully slow,” the VC added.

It’s perhaps unsurprising then that green shoots and fruitful deals are thinner on the ground in Boston today than its startup community probably would have hoped. Momentum through dollars or deals will lead to more sustained recovery. Flare Capital’s Michael Greeley said that it is “still too early” to see green shoots, while other VCs noted that, on a sector-by-sector basis, there are some positive signs that give hope.

Glasswing is an AI-focused fund, making the following comment from its Rudina Seseri interesting, if niche. On the question of green shoots, Seseri said that her firm has “been surprised by the number of companies that are leveraging AI to drive automation, cost savings, optimization and higher performance.” The result of that surprise has been that “over the last five months these companies have beaten their pre-COVID budgets and forecasts for growth.”

The other side of that coin is startup areas that touch on travel or food. It’s hard to find recovery there, for obvious reasons.

The Victress Capital team put the dynamic well: “We’ve also been encouraged by the increased pace in innovation that we’ve seen across sectors where innovation has been slow in the past. From edtech to telehealth to food and beverage and more, we are seeing nimble entrepreneurs pivot or change their businesses to respond to the needs of today.”

Our broadest takeaway is that VC firms have not fully written off any sectors given today’s turbulence. The future, largely according to Boston-focused VCs, is startups that are important after the world opens again and focus on the next generation of businesses. It means that investments might look a bit like a risky game of hopscotch. They’re all trying to land on the deal that accounts for the next generation of businesses.

With that, let’s get into full questions and answers.


Lily Lyman, Underscore VC

When do you expect a startup recovery to begin?

“Recovery” is hard to speak to. We’ve been evaluating different phases of behavior and how that will affect the economy and the startup ecosystem. We have been thinking in terms of (1) lockdown opening up (summer 2020); (2) period of remaining social distancing behavior, likely with intermittent periods of lockdowns (into spring 2021); and (3) new normal (spring/summer 2021). But this changes and we are constantly reassessing it. For startups, we remain believers that great companies with great leadership can not only survive but find ways to thrive in this new environment.

Are you seeing green shoots regarding revenue growth, retention or other momentum that you didn’t expect a few weeks ago?

Again, it varies by industry. We have seen a surge in demand for players in the cloud infrastructure space such as CloudZero or for remote collaboration software (an investment not yet announced).

Tell us about the most interesting, Boston-based company you’ve invested in recently.

We are really excited about Popcart and how they are positioned as the world rapidly migrates to e-commerce. The founding team is a pair of engineer leaders from Endeca. Popcart offers consumers price and availability transparency across retail platforms (Amazon, Target, Walmart, etc.). The cross-platform capabilities are particularly unique. When COVID-19 hit, the team quickly created the Supply Finder to help consumers find goods that are in short supply and ensure they are protected against price gouging.

What is a moment that has given you hope in the past 30 days? This can be professional, personal or a mix of the two.

I’m inspired by the great leadership I’ve seen our founders display. They’ve made hard decisions with imperfect information and managed a difficult time with both empathy and conviction.

I’m also appreciating the humanizing reality that working from home and operating in uncertainty brings that unites people. My hope is that pieces of this uniting and empathy will persist.

Rudina Seseri, Glasswing Ventures

When do you expect a startup recovery to begin?

At this time, it is unclear. Startup recovery will be correlated with individual states’ and the country’s reopening but it may not be a straight-line recovery. Clusters of COVID-19 may cause new shutdowns if there are recurrences in the fall. It will likely be a prolonged 24-month recovery with starts and stops until we have a clear and effective treatment and/or a viable vaccine emerges for the masses.

Are you seeing green shoots regarding revenue growth, retention or other momentum that you didn’t expect a few weeks ago?

Yes, we have been surprised by the number of companies that are leveraging AI to drive automation, cost savings, optimization and higher performance. Over the last five months these companies have beaten their pre-COVID budgets and forecasts for growth.

Tell us about the most interesting, Boston-based company you’ve invested in recently.

Let’s follow up on this when we can tell you about our most recent investment.

What is a moment that has given you hope in the past 30 days? This can be professional, personal or a mix of the two.

The resilience of our founders and their commitment to success has been inspiring. And, I am grateful and touched by the enthusiasm and sheer joy of my child who appreciates my working from home.

Plus any other thoughts you want to share with TechCrunch readers.

Under difficult circumstances, the power of next-generation tech and AI has shown it is here to stay. It is resilient and a major driving force for the future. Automation is driving value creation in this new world of tracing and social distancing.

Jamie Goldstein, Pillar VC

When do you expect a startup recovery to begin?

We anticipate that this will be sector dependent. Some companies are seeing an increase in traction as a result of COVID, others are being hurt badly. We think that for many companies, the rest of 2020 will prove challenging and hope that the environment will start to return to a somewhat normal state by early 2021.

Are you seeing green shoots regarding revenue growth, retention or other momentum that you didn’t expect a few weeks ago?

Not yet.

Tell us about the most interesting, Boston-based company you’ve invested in recently.

Knox helps you turn a property you already own into an investment that delivers passive income, with none of the work or hassle. The company streamlines the entire process for an owner, from finding renters to taking care of maintenance to managing finances.

What is a moment that has given you hope in the past 30 days? This can be professional, personal or a mix of the two.

We host a weekly standup on Friday afternoons with our portfolio CEOs  —  no agenda, just an opportunity to connect and talk about their week. Each week, participation grows stronger. We share events from the week, concerns and good news. We laugh and we empathize. Many people simply want a connection with others.

Plus any other thoughts you want to share with TechCrunch readers.

We believe now is a great time to build. The world has changed dramatically over the last few months. While some aspects of daily life will return to the way they were, others will be transformed for good. Thousands of people are sitting in their homes with ideas for companies that will fundamentally change the way we live, work and connect socially. We recently launched Breakout, a free virtual six-week program for anyone thinking about building a company to explore entrepreneurship and join a community of future founders. We hope the program will open up access to people who have the potential to transform everything from supply chain efficiency to health care to labor market inefficiencies to new tools for remote collaboration.

No one has ever navigated anything like this pandemic before, and many founders are leading through a crisis for the first time in their careers. We worked with several of our firm’s co-founders, experienced leaders of companies including PillPack, Demandware, Ginkgo Bioworks and Iora Health to pull together insight around how to communicate with your team during a crisis.

Many founders are also facing layoffs for the first time as a result of this crisis. Russ Wilcox, partner at Pillar VC, is a serial founder who has navigated change and uncertainty throughout his career. Russ shared his thoughts with founders about how to be a decisive leader, handling layoffs with a clear strategy and empathy for your team.

While every company is processing change and uncertainty right now, it’s critical for founders to create clarity and alignment for their teams. Pillar Partner Sarah Hodges created a tactical guide for founders to strategic planning during times of uncertainty.

The Victress Capital team (Lori Cashman, Suzanne Norris, Kate Castle, Madeline Keulen and Molly Sellers)

Are you seeing green shoots regarding revenue growth, retention or other momentum that you didn’t expect a few weeks ago?

Yes, we have observed a rebound in consumer shopping. Across many metrics (basket size, online conversion rates, etc.). In many sectors of the consumer market, the numbers have gone back to, or exceeded, their pre-COVID levels.

Tell us about the most interesting, Boston-based company you’ve invested in recently.

One of our recent Series A Boston investments was in Alyce, which provides an enterprise SaaS platform that enables sales and marketing teams to use 1-to-1 gifting to drive pipeline and revenue with their prospects, customers and partners. This unique approach creates relatable, relevant and respectful outreach that appeals to the person behind the persona to build rapport, earn trust and drive loyalty. With the world going completely digital, Alyce has become the best way for enterprise sales and marketing teams to engage personally with their prospects and customers where face-to-face isn’t an option.

What is a moment that has given you hope in the past 30 days? This can be professional, personal or a mix of the two.

While these past few months have been challenging times for all of us personally and professionally, there are many things that have given us hope. We believe diversity drives better outcomes, particularly in a crisis when the path forward is uncertain. Now more than ever it is important for leaders to develop inclusive, varied perspectives as they build their short- and long-term strategies. Seeing strong, diverse leadership teams across the world successfully respond to this crisis has given us hope.

We’ve also been encouraged by the increased pace in innovation that we’ve seen across sectors where innovation has been slow in the past. From edtech to telehealth to food and beverage and more, we are seeing nimble entrepreneurs pivot or change their businesses to respond to the needs of today.

Rob Go, NextView

When do you expect a startup recovery to begin?

While it’s difficult to predict, we think a swoosh-shaped recovery is more likely, where the recovery is likely to be painfully slow.

Are you seeing green shoots regarding revenue growth, retention or other momentum that you didn’t expect a few weeks ago?

Certain subsectors are experiencing positive tailwinds. But we think those sectors are relatively few and far between. We think the full economic impact of the pandemic will start to be realized in Q3/Q4, and we are already starting to see some early indicators of this, even in sectors/companies that had a strong first half of 2020.

Tell us about the most interesting, Boston-based company you’ve invested in recently.

Form Health: medical weight loss program delivered via telemedicine. Founder/CEO (Evan Richardson) was the cofounder of Grand Rounds, a Greylock-backed health tech company in SF. Evan moved back to Boston to start the company and teamed up with the head of medical weight loss from Brigham and Women’s, and the VP Engineer from PillPack. Killer team going after an important problem with positive tailwinds from SIP.

What is a moment that has given you hope in the past 30 days? This can be professional, personal or a mix of the two.

Leadership is revealed in times of crisis. And it’s been encouraging to see the strength of leadership that has been demonstrated by some of the governors.

Bill Geary, Flare Capital

When do you expect a startup recovery to begin?

Fully expect a startup recovery to begin in Q1 2021 and progressively ramp and improve throughout the year.

Are you seeing green shoots regarding revenue growth, retention or other momentum that you didn’t expect a few weeks ago?

There is early optimism for the current uncertainty to give way to predictable stabilization followed by measured, improving growth.

Tell us about the most interesting, Boston-based company you’ve invested in recently.

We co-led a seed investment in Tausight, a health care cybersecurity software solutions provider around a proven successful CTO entrepreneur, David Ting, who was the former co-founder of Boston-based Imprivata, and recently announced the recruitment of Dave Dickinson as CEO, a former exec at UnitedHealth Group and Optum Labs.

What is a moment that has given you hope in the past 30 days? This can be professional, personal or a mix of the two.

Family Zoom meetings!

Would you ever focus solely on DTC?

As a health tech and health care services venture capital investor, our portfolio companies are focused on providing their solutions to one or more of the following five customer segments: health care providers, payers, pharmaceutical companies, self-insured employers and consumers, with business models that are generally B2B or B2B2C. Although we wouldn’t ever solely focus on investing in DTC solutions providers, the consumer is driving profound change in health care delivery and consumption and is always a critical component of our investment thesis.

Michael Greeley, Flare Capital

When do you expect a startup recovery to begin?

My analysis suggests that this will look like the post-dot.com bubble in 2001–2002. What we saw then was that the quarterly pace normalized to be ~40% of what the pace had been going into the bursting of the bubble, and it stayed that way for almost five years. I would expect that by Q3 2020 we will establish a “new normal” for investment pace and it will be well below 50% of what the quarterly pace was in 2019. It is also true that investment performance for the few years following a major correction are terrific so there is much to be excited about once we weather the immediate crisis.

Are you seeing green shoots regarding revenue growth, retention or other momentum that you didn’t expect a few weeks ago?

Still too early to see that.

Tell us about the most interesting, Boston-based company you’ve invested in recently.

Iora Health — reinventing primary care models, taking outcomes risk on Medicare Advantage patients, showing exceptional impact on quality of the lives at much lower costs.

What is a moment that has given you hope in the past 30 days? This can be professional, personal or a mix of the two.

This is really hard given the pandemic. I guess seeing the curve finally flattening, sort of. The election is ~5.5 months away so hopefully we can lower the political rhetoric on the other side of what is going to be a very tough sprint to Nov. 3.

Jeff Bussgang, Flybridge Ventures

Are you seeing green shoots regarding revenue growth, retention or other momentum that you didn’t expect a few weeks ago?

Yes. Some of our portfolio companies are performing very, very well. I had expected more of a downturn. That said, there may be second order effects coming that we haven’t seen ripple through the economy with the dramatic downturn in employment and consumer demand (e.g., marketing and advertising spend sharply down).

Tell us about the most interesting, Boston-based company you’ve invested in recently.

Kebotix is one of the most interesting companies in Boston, if not the world. They recently closed (in mid-April) an $11 million+ series A for their AI-powered self-driving lab. Amazing company.

What is a moment that has given you hope in the past 30 days? This can be professional, personal or a mix of the two.

Moderna gives me hope. Go Moderna!

Would you ever focus solely on DTC?

Flybridge has historically been an enterprise IT investor (e.g., MongoDB, BitSight, BetterCloud, Firebase) although we are very enthusiastic about our community theme and backing companies that leverage community as a competitive advantage (e.g., Codecademy, Chief, TasteMakers).

Neeraj Agrawal, Battery Ventures

When do you expect a startup recovery to begin?

I think the recovery for startups is also going to be sector- and market-specific. If you sell mission-critical cloud technology to Fortune 500 companies, your business may pick up faster than if you’re in the travel industry. I’m optimistic things may start to turn around by the end of this year, but it could be next year.

Are you seeing green shoots regarding revenue growth, retention or other momentum that you didn’t expect a few weeks ago?

Yes. I’ve been really impressed with how quickly so many entrepreneurs have switched from the typical SaaS-metric mindset — focused on things like customer-acquisition costs and ARR — to a more hardcore business mentality centered on things like collections and cash flow forecasting. This kind of nitty-gritty, financial work is not really something many first-time founders, especially in the last several years, have had to deal with. I’ve been pleasantly surprised by how many of them are working hard to make the transition.

Tell us about the most interesting, Boston-based company you’ve invested in recently.

One Boston company that we’re very excited about is actually one that we haven’t publicly announced yet. But I can say it’s a health care software company whose technology is directly related to COVID-19. I’m excited to talk more about this one when the time is right.

What is a moment that has given you hope in the past 30 days? This can be professional, personal or a mix of the two.

Most of our companies with March quarter-ends had minimal impact to their Q1 bookings. This makes sense given the shelter-in-place orders really went into effect during the last two weeks of the quarter, and those companies’ sales cycles were close to the finish line. I was concerned more about companies with April quarter-ends (for our companies that have a January-end fiscal year). Interestingly, many of these companies beat their revised budgets and cash collections, [and], in general, are going better than I had feared given that many companies are very focused on cash preservation right now. Net net, it makes me more cautiously optimistic about companies with June/July quarter-ends, but to be honest, I really think June/July will be the first clear data point on post-COVID results as the sales cycles are now being mostly executed with WFH/shelter-in-place.

Plus any other thoughts you want to share with TechCrunch readers.

It’s hard to believe, but I’ve been at Battery for almost 20 years (anniversary in August this year). I lived through the 2001 and 2008 business downturns. While neither of those were as extreme and felt across the entire global economy all at once, both of those recessions did lead to the acceleration of new product/market trends. SaaS as a delivery model really got going post-2001 and the cloud (e.g., AWS) versus on-premise trend really started taking off post-Great Recession. Both of those technology waves allowed customers to reduce costs and served as a catalyst to leverage new technologies. This time around will be similar. We will see acceleration of the digitization of the economy and AI-enabled workflows, and perhaps industries that have been technology laggards, such as health care and education, will now fully adopt the power of digital. Based on prior recessions, there is no better time for founders to start exciting new companies. Stay safe and venture on!