A founder asked 500 venture capitalists if they were still investing during COVID-19. He broke down the results for us.


Ismail Jeilani

  • The COVID-19 pandemic has sent venture capitalists into retreat, with research suggesting a third of investors pulled out of UK seed deals in March.
  • Ismail Jeilani, founder and CEO of education startup Scoodle, decided to ask as many investors as he could if they were still investing. 
  • High-profile investors including Accel told him the firm was “obviously” still investing – and Blossom Capital promised not to “judge teams by any short/medium-term impact of COVID-19”. 
  • Despite reports of some VCs employing “horribly exploitative” negotiating practices, the overwhelming number of responses to Jeilani’s survey were positive. 
  • Visit Business Insider’s homepage for more stories.

As the COVID-19 pandemic took hold of the world in the opening months of 2020, venture capitalists were in retreat. 

Research showed almost one-third of investors pulled out of UK seed-funding deals in March amid fears that the pandemic could trigger a global recession. 

And European startup investors were thrust into the spotlight over how they had behaved at the outset of the coronavirus outbreak, with accusations of “horribly exploitative” practices, reneging on terms, and dropping deals. 

Amid the chaos, Ismail Jeilani, CEO of online tutoring startup Scoodle, tried to find out who was and wasn’t interested in investing – and came back with some interesting results. 

After crowdsourcing responses from 500 European investors such as Accel, Seedcamp, and Talis Capital (and recording the results in this Google Sheet), Jeilani found almost all of them were still investing – with some exceptions. 

Accel assured him the firm was “obviously” still investing, while UK-based Blossom Capital said it would not “judge teams by any short/medium-term impact of COVID-19”. 

Jeilani broke down what he found out for us:

Things could remain uncertain for 18 months 

With the prospect of a hard recession on the horizon, it’s understandable that investors are counting their pennies right now. 

“A startup would be smart to ensure they can exist for at least 18 months,” said Jeilani. “That covers the worst-case scenarios of a recession and its recovery.” 

Recent analysis from PwC found remote businesses are the most likely to thrive during the pandemic, particularly in the education and health startup sectors. 

One investor, who Jeilani did not name, told him: “The impact on funding will likely be substantial and negative.

“We were already in a very late-cycle environment, and this crisis quite probably is the catalyst that brings that cycle to an end. We are seeing early signs of investors pulling back/delaying rounds/conserving cash to support the existing portfolio.”

They added: “Having said that, there is current demand from some firms for companies that can prove they are resilient in this environment.” 

Deals will take longer and valuations will drop

“Many funds aren’t used to doing due diligence entirely online, especially at seed stage” said Jeilani. 

“The emphasis is always on the founders. To what extent can you really invest in someone without meeting them? It’s definitely possible…but for a lot of funds, this is a steep learning curve.” 

As nations around the world have enforced strict lockdown measures, founders have described shared their own stories with Business Insider of pitching to investors over Zoom, or signing term sheets while trying to board the last flight out of a country.

“Rounds are likely to take longer, investors will be more cautious and there could be weaker pricing. People will be wary of meeting up in person and that creates an additional due diligence risk,” one unnamed investor told Jeilani.

“Companies that need a round to keep growing, rather than for [further] growth, will be better off going to existing investors and seeking less until things improve.”

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