Raising Capital in Uncertain Times

Jun 26, 2020

Without question, COVID-19 has brought on an unprecedented level of uneasiness and worry for many.

At Jumpstart, we made the decision that, while we were facing uncertainty, we needed to push forward and continue making investments in early-stage healthcare entrepreneurs. The need for healthcare innovation has never been greater and we knew that our role as an early-stage healthcare investor was more important than ever.

However, not everyone has taken our approach, and for entrepreneurs right now, it can feel as though sources of capital have been harder than ever to find.

In this webinar, Jumpstart Foundry Managing Director, Eller Mallchok, and Monique Villa from Mucker Capital, discussed capital options that are currently available to entrepreneurs in challenging times like today. Mucker Capital is a venture capital firm based in LA with a second office in Nashville. The firm focuses on pre-seed and early-seed investments, specifically in software and technology entrepreneurs.

Highlights from the Webinar

Current Investor Mindset

Amidst the COVID-19 outbreak, the current mindset for investors has evolved. As two successful women investors in venture capital, Eller and Monique began their discussion with the current mindset of investors during this uncertain time.  Monique pointed out that, “all aspects of investing have been impacted, starting with Limited Partners (LPs).” Therefore, it’s a trickle effect all the way down to founders. Thus, founders have received a range of responses from investors, making it very complex and difficult to raise capital. Some investors have had to completely pull back from writing checks, specifically angel investors who have had to tighten their belts. However, as a result of the pandemic, other venture capital firms and investors have increased their deal flow due to inactive investors sending founders to active firms.

In addition, Eller emphasized that the types of deals investors are looking for are evolving with as our country begins to look towards a new normal. Meanwhile, it is important for founders and investors alike to remember that the pandemic has caused strain for people in many ways, both personally and professionally. Therefore, we need to be honest, build trust, and help each other through this time.

Advice for Founders

Now is a great time for founders to receive feedback from clients. It is important to listen to what is needed or not needed in the market. The feedback will inform founders whether the product they are building is needed and valuable in the present and future market. However, that does not mean founders need to completely pivot to meet the market in ways that do not make sense for the individual company. It is important to stay focused and be aware.

Eller advised to “not change the entire business model to feel applicable to this moment, but founders should consider how their product can fit into the current market. Stay intentional with the product and how your company is building it.”

Dos & Don’ts for Raising Capital Today

Founders often approach investors with urgency stemming from excitement surrounding their product and potential company. However, as people continue to recover from hardships brought forth by the pandemic, Monique Villa advised that as founders approach investors today to be mindful of their personal challenges. You never really know what is going on in people’s personal lives that may impact their professional lives. “Remember VCs are people too, so it is important to incorporate humanity in communications with investors.” It is extremely important to acknowledge times have changed, and therefore, business strategies are changing as well. Founders need to keep their decks updated and remain aware of the impacts of COVID-19 on a day to day basis and business execution.

Founders should do their research before reaching out to an investor. Pulling back to the humanity aspect, when a founder reaches out to an investor with a personal greeting and includes a common narrative, investors are more likely to reciprocate and consider investing.

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