My MatchingWINGS

Corona stress test– startup investments

As MatchingWINGS we notice that after a period of other priorities, angel investors again have an appetite to engage in new startup investments. However, they are more careful compared to the pre-Covid period. Risks can be reduced by increased syndication and the phasing of investments.

In order to understand the impact of the Corona crisis on startups, we have developed a Corona stress test. Basically, the test consists of 3 open questions since we concluded that general answers are not possible and that the impact of the crisis differs very much per sector. To stimulate startups overthinking wat could be relevant for them, we provide some examples.

The three questions are:

1. How is customer demand affected by the Corona crisis?
Changes in customer demand ranges from ability to pay, other needs due to other customer behavior or other priorities set by the customer.
Please note that customer demand can be positively affected by the Corona crisis. Then it should be assessed whether current offering has a limited window of opportunity or can survive in the post-Covid period. Investment opportunities with a short lifetime may require other funding instruments (e.g. revenue-based investments).

2. How is customer contact affected by the Corona crisis?
The (partial) lockdowns and/or limiting of international traffic can impact the marketing & sales process and after sales customer contact. But not all firms are equally affected, and many alternative communication means are available.

3. How is the production and delivery of product/service affected by the Corona crisis?
Production can be negatively affected by availability of parts from foreign producers, delivery can be dependent on the shipping of products to international customers. It may also be relevant to demonstrate how the startup organizes its own processes to comply with the current corona rules (working from home for non-vital firms, 1.5-meter distance, measuring temperature or other disease symptoms etc.). Please note that Corona rules differ per country and are quite dynamic, so ongoing attention for changes in the rules is key.