For most companies, the corona crisis poses dramatic challenges. Demand is collapsing, supply chains are breaking down, financing is becoming more difficult. The aftermath of this crisis will be felt for a long time to come. However, we are currently seeing developments that encourage confidence. Historically, crises have always been periods that have helped new thinking and new technologies to break through. This will also be the case now. It is already becoming evident in many areas: home office work and digital educational offerings, for example, have been rapidly gaining ground. And this is only the beginning.
In several future fields, such as digitalization, energy supply and mobility, there has long been an innovation backlog. The crisis will help to bring about overdue transformations. In many cases, there will be no return to the status quo. Companies that do not operate sustainably and are not innovative will have a hard time now. Instead, new markets will emerge, and smart entrepreneurs will shape them with new technologies. As venture capitalists, we invest in these entrepreneurs. No matter how dramatic the crisis is now, it will not stop progress, but accelerate it. We believe that sustainable companies will emerge stronger.
But currently it is becoming more difficult for start-ups to secure financing. In the face of severe cuts in their core business and strategic course corrections, many corporates will reduce their involvement in the venture sector. And institutional investors will also have to limit their risks, for example to compensate for losses in value on the stock markets. We are therefore facing a remarkable situation. While major technological advances and breakthroughs are just around the corner, there is less venture capital available.
This is an exciting constellation for investors who want to invest in venture capital over the long term. Company valuations are now becoming much more favourable. And for start-ups that offer innovative solutions, the chances of success are even increasing. Anyone who has been waiting for the right moment to invest in venture capital should now think about getting involved.
For further information, please contact our team.