Working Paper: NBER ID: w27824
Authors: Paul Gompers; Will Gornall; Steven N. Kaplan; Ilya A. Strebulaev
Abstract: We survey over 1,000 institutional and corporate venture capitalists (VCs) at more than 900 different firms to learn how their decisions and investments have been affected by the COVID-19 pandemic. We compare their survey answers to those provided by a large sample of VCs in early 2016 and analyzed in Gompers, Gornall, Kaplan, and Strebulaev (2020). VCs have slowed their investment pace (71% of normal) and expect to invest at 81% of their normal pace over the coming year. Not surprisingly, they have devoted more time to guiding the portfolio companies through the pandemic. VCs report that 52% of their portfolio companies are positively affected or unaffected by the pandemic; 38% are negatively affected; and 10% are severely negatively affected. Overall, they expect the pandemic to have a small negative effect on their fund IRRs (-1.6%) and MOICs (-0.07). Surprisingly, we find little change in the allocation of their time to helping portfolio companies relative to looking for new investments. In general, we find only modest differences between institutional and corporate VCs.
Keywords: Venture Capital; COVID-19; Investment Decisions; Portfolio Management
JEL Codes: G24; G30; G31; L26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| COVID-19 pandemic (H12) | slowdown in investment pace (E22) |
| COVID-19 pandemic (H12) | varied impact on portfolio performance (G11) |
| COVID-19 pandemic (H12) | decrease in fund internal rates of return (IRRs) (G23) |
| COVID-19 pandemic (H12) | little change in time allocation to helping portfolio companies vs seeking new investments (G31) |