A year after warning startups with its Black Swan memo, venture capital firm Sequoia Capital published a follow-up post advising startups to prepare for a stronger economic growth in the second half of 2021.
The Silicon Valley firm said consumer debt has dropped and savings have increased as the Covid-19 vaccines look to bring lockdown to an end.
“While the pandemic is far from over, we see an important window of opportunity opening right now. If you feel confident about your business post-vaccine, now is the time to start carefully stepping on the gas” the VC firm said in a note to its portfolio company founders which was later reposted on Medium.
The storied venture capital firm advised startup founders and chief executives to remain deliberate and measured in this uncertain environment, but also stay optimistic about where the world is going. “While you prepare to take advantage of the opportunities ahead, remain nimble as you fine-tune your tactics. This will enable you to focus on your long-term aspirations while navigating the next few quarters” it said.
It also asked startup founders to anticipate customer pain points and respond to their changing needs. “No one really knows what the post-vaccine world will look like. Continue to have “Dumbo ears”. There will be just as many surprises coming out of the pandemic as there were going in.” the firm said.
While the virus outbreak had a significant impact on certain sectors, several technology companies have benefited from people shifting much of their activities online due to the pandemic-induced lockdown. While dealmaking slowed during the early days of the pandemic, it saw a substantial rebound in the second half of the year.
Average deal sizes across sectors have gone up substantially in the past eight months with funding rounds closing in record time and startups raising more capital than planned, ET reported on Thursday.
Sequoia Capital emerged as a standout venture investor in 2020, with seven of its portfolio firms going public amid the IPO rush in the US last year. Three of them – Airbnb, DoorDash, and Snowflake – are among the biggest ever technology IPOs in terms of capital raised, with each of them raising more than $ 3 billion through their respective offerings.
Earlier this month, ET reported that Sequoia India invested in the highest number of startups in the country last year, fuelled by the closure of a $ 525 million venture fund and a $ 825 million growth fund.
The venture firm had also scripted a big win from the public debut of one of its non-tech bets Indigo Paints in January this year. The firm was expected to garner up to Rs 650 crore by selling a 7-8% stake in the firm’s IPO, ET reported in January.
Sequoia is also an investor in Zomato that is aiming to tap the public markets this year, although no investor is selling its shares in this offering, ET reported earlier this month.