Venture Capitalists and COVID-19

Abstract

We survey over 1,000 venture capitalists (VCs) on how the COVID-19 pandemic has affected their decisions and investments. Despite the historical importance of in-person meetings, VCs do not report difficulty finding quality entrepreneurs or major changes in time allocation. They do report difficulty in evaluating deals, more investor-friendly terms, and a decreased investment rate, with about one-sixth of VCs reporting pressure from limited partners to conserve capital. Although aggregate returns are largely unchanged, there is high dispersion both within and across funds. A follow-up survey shows faster-than-expected recovery in deal volume, terms, and returns.