Grady Vanderhoofven reminds everyone that “this will pass”
(EDITOR’S NOTE: We contacted several of the angel and venture investors in the region to get their thoughts on how the COVID-19 pandemic is impacting their activities and their portfolio companies. Ken Woody, President and Partner at Innova Memphis {click here}; Tony Lettich, Managing Director of The Angel Roundtable {click here}; and Eric Dobson, Chief Executive Officer of Angel Capital Group {click here} offered their insights in previous articles. Today’s input comes from Grady Vanderhoofven, President and Chief Executive Officer of Three Roots Capital.)
- How has the COVID-19 pandemic and the corresponding turbulence in financial markets changed the angel and venture world in general, particularly as it relates to new deals? I perceive a general slowdown in new deals and a focus on existing portfolio. I believe many investors and lenders have been watching the actions of Congress, the Fed, the Treasury Department, and bank regulators. The legislation and policies that are being birthed and evolving will affect financial markets and together all of those variables will affect angel and venture investing. No matter what happens with legislation and policy, I anticipate a continuing slowdown of angel and VC activity around new investments in the near-term.
- Is that trend continuing in terms of your operation? I’m assuming that tools like Zoom, etc., have become your friend. We don’t want to slow down at all, as we felt like we had a lot of momentum. Every conference, event, and trip we had planned for Q2 has been cancelled or postponed. We are doing everything we can to maintain momentum, while assessing how the current economic scenario forces us to alter our course or our emphasis. Yes, we are “Zooming” and conference calling more than usual, and I am lamenting that I didn’t buy Zoom stock at the beginning of the year.
- From the perspective of your portfolio companies as a group, what sort of impacts are you seeing on their operations? Portfolio companies are doing what they can to slow or stop all but essential expenditures. In addition, all of our companies are exploring the new legislation to see if funds may be available directly from the federal government and/or through intermediary lenders. New hires are being delayed. New purchases are being delayed. Our companies are looking for opportunities in the challenges; how might they generate a positive outcome from what appears on the surface to be a negative headwind?
- What, if any, advice would you offer entrepreneurs right now? Cut and/or delay discretionary spending. Focus on essential spending and protecting/preserving revenue. Study the recently enacted federal legislation and policies to see how your company might benefit. Don’t freak out. This will pass. Look for opportunities to make lemonade from this lemon.
