We had the pleasure to interview Abi Mohamed, Co-Founder of Community Growth Ventures, on her view on how the coronavirus has impacted the very early-stage VC market in the UK and beyond. Please find the interview below.
Abi, how do you see the coronavirus impacting the activity among very early stage VCs?
So far, the coronavirus has not yet impacted the very early stage VC market that much. But what I’ve noticed is that founders have implemented more pivots within their product roadmap. Founders have included “Plan B” and “Plan C” type of scenarios dependent on the future economic development in our society within their pitchdecks. We’re still investing and looking for interesting startups. But from an investor’s perspective, it’s important to see that founders have thought about how they plan to navigate through these tough times.
Has this crisis impacted or changed the criteria that you look for in a startup?
I don’t think my criteria has changed. The people that we’re backing with CGV are coming from underrepresented groups in society and often had to face severe adversity. Therefore, the virus has in some way even reassured my investment thesis. Because these are people that will have the necessary experience and skills to navigate these challenging times and come up with new solutions when they are needed.
Can you tell us more about how you even see this in your current portfolio?
Sure. A great example is how proactive our founders reached out to us when the virus issues got more severe. They were not shocked but contacted us proactively with new action plans right away. Our founders had to deal with difficult situations many times, for example as bread-winners of their family or by facing many other struggles as part of a minority. I promise you, this crisis is just business as usual for them. I know how it feels because I have been in their shoes.
How have you seen coronavirus impacting valuations in the very early stage field?
The overall VC market has reacted quite fairly towards founders. But we have seen some VCs who have used coronavirus as an opportunity to slash valuations. This may lead to short-term gains, but in the long run these VCs won’t benefit. At the same time we see founders who are very confident in their business and who don’t want to accept valuations that are too low. These founders are starting to explore alternative sources of capital like debt or revenue-based funding like what you are offering.
With all the terrible things that we see on TV, are there maybe also some positive things in this crisis? What excites you nowadays?
This is likely going to be the first recession that I will experience as a working adult. I’m scared, but at the same time I’m very excited because if we look at what happened in 2008 then we see that a lot of the big startups today emerged during that time of crisis. So, I think that now is the time where we are meeting the next CEOs that are going to change the world. What also excites me is that underrepresented founders are going to get more spotlight because more people will see the value in their businesses. I also hope that people in London become a little bit more relaxed from staying home for a while. This city runs 24 hours a day, 7 days a week — we could use some of your European relaxedness sometime.
Abi, thanks a lot for this conversation!
Abi is co-founder of Community Growth Ventures, an angel investment firm that supports and invests in underrepresented founders. She also a Venture Scout at Backed VC, a €50m community-driven seed stage VC fund, based in London. She also supports various County Councils & Government bodies across the UK.