As of this writing, COVID-19 has killed more than 3,400 people around the globe and the coronavirus has infected tens of thousands more.
But its impact has gone much further, causing major disruptions in public markets and leading corporations to pull out of conferences and delay travel.
Big tech companies are asking workers to stay home and investors are now urging startups to prepare accordingly.Coronavirus fears are now affecting fundraising for startups.
I am seeing advice that tells any company that might run out of cash in 2020 to start raising now before things might get a lot tighter.
RIPGoodTimes?mdash; Josh Elman (@joshelman) March 1, 2020Sequoia Capital sent a letter to its founders on Thursday warning that the coronavirus was a &black swan& event and startups should &brace themselves for turbulence& by considering if they have enough cash and preparing to face supply chain disruptions.
The letter also warned they could have a harder time fundraising, similar to the market downturns of 2001 and 2009.The coronavirus effect is rippling throughout the tech world.
Seattle, which has seen a cluster of cases, seems almost a ghost town in some parts, according to entrepreneur and former Madrona Capital partner Shauna Causey.
She told TechCrunch that many of the coffee shops and co-working spaces popular among VCs have gone empty in the last week and all of her fundraising meetings are conducted via Zoom.Given that fundraising can take several months, if their cash out date is 2020, they should be fundraising soon anyway also hearing from founders it already getting hardmdash; Evelyn Rusli (@EvelynRusli) March 2, 2020A Singapore-based VC firm told a startup I&m working with that they&re not going to wire the entire $2m investment they committed to in the Series A, which has been in closing the last few weeks.
The rationale was to conserve capital due to coronavirus.
The funding risk is real.mdash; Tommy Leep (@leepnet) March 4, 2020And already there some chatter that funding might be drying up for early-stage startups, though Bloomberg Beta Roy Bahat tells TechCrunch that startups should always be fundraising as soon as they can to protect themselves from this type of calamity.