Last week we had the pleasure to interview Eva Arh, principal at capital300, a Europe-based VC with a focus on Series A funding. We are excited to share with you her take on some of the emerging challenges in times of Corona. (Interview in English):
Are you still investing? And if yes, have there been any changes in your investment focus?
Yes, we are still investing! In fact, we have just closed a deal in March and we are having advanced conversations with companies that we got to know before the corona outbreak. However, we have become more careful when looking at certain sectors and everyone needs to acknowledge that, as a result of this crisis, growth forecasts need to be adjusted for 2020. 3x, 4x growth forecasts are less likely now and we need to factor this into our investment process. We like to see companies that do well despite the crisis and are much more cautious when seeing companies that do well because of the COVID-19. We want to be a partner for the long run and look at our investments with a much longer investment horizon than just the next few months.
Is there anything corona-specific that you would recommend founders to include in their pitch decks — something they would not necessarily have put in before?
It is important for us that founders demonstrate an understanding of the current situation and how it affects their business. For start-ups positively affected this means being aware of the temporary component of the pandemic. We would like to see their long-term plans and how they intend on keeping the momentum on their side. On the other hand, those who feel the negative effects of the corona crisis have to show us that they are assessing these effects realistically and have a sound strategy for dealing with them. There are also some companies which don’t experience much change yet at all. In this case, it would still be beneficial to show us that they have thought about potential changes and adjustments that need to be made in the future.
Capital300 has been cooperating internationally with several leading VCs like Sequoia and Accel. How do you think will cooperation between VCs across countries and continents be affected by corona?
Of course, VCs all around the globe are becoming more selective as a result of the crisis. Investments in Europe are now much more difficult for US VCs given that personal meetings with founders aren’t possible anymore. At the same time, it is now even more important forforeign VCs to have a local partner when they invest abroad. It really depends on the investment case and how much conviction the VCs have and how much they want to engage here in Europe.
In which sectors do you see major long-term changes happening vs. just short-term spikes?
One sector that is making huge steps forward and will continue to do so is the health sector. Within the last 2–3 months we have seen an advancement here that would otherwise have taken years. Telemedicine and remote diagnostics, for example, are fields that will remain extremely relevant in the coming years. Another sustainably fast-growing sector is cloud computing. Even if some of those companies were not properly prepared for the enormous demand that they face now, we will still see their tailwind in the end.
Bonus question: What are you still excited about nowadays?
What excites me personally is looking at how dynamics change through the current remote work situation and especially how deals are getting done without a personal meeting between founders and VCs. In addition, it’s exciting to see how several companies seize opportunities arising from the current situation. In the end, I am confident that strong companies will emerge from this crisis.
Eva, thanks for talking to us!
Eva Arh is Principal at capital300, an Austrian-based VC focusing on Series A stage investments in game-changing European technology startups.