With the World Health Organization recently declaring the COVID-19 outbreak a global pandemic, businesses, start-ups and investors have had to adapt to developments very quickly. The spread of the corona virus has resulted in a reorientation of relations between governments and businesses and has caused many countries to enforce stringent lockdown policies. With that being said, we have also seen unprecedented global efforts to work together to stem the spread of the virus.
In an effort to better understand its effects and opportunities that the current situation can present, particularly for start-ups and the energy sector, we turned to Gina Domanig from Emerald Technology Ventures who has agreed to answer some questions on how companies are adjusting to the developments related to the corona virus outbreak and its global effects.
Gina Domanig is the founder and Managing Partner of Emerald Technology Ventures, a globally recognised venture capital firm focused on energy, water, advanced materials and industrial IT investing in North America and Europe.
In light of the COVID-19 pandemic, have there been any changes in your daily business practices (outside of home office)?
Gina Domanig (GD): We are in much more frequent contact with our portfolio companies to monitor and decide on actions to be taken to protect employees, secure supplies, continue with orders, close on pipeline deals asap, draw on financing lines and, unfortunately, cut costs to extend the runway.
Has the current crisis deeply affected the energy investment ecosystem?
GD: Not yet but this will certainly have an impact, just as the last financial crisis took a major toll on institutional investors (ie they will once again be technically over-allocated to alternative assets), corporate investors (who will be looking for any means to conserve cash), VCs (particularly those who are fund raising may never get their funds together and have to close down), and start-ups (those raising money will have a very difficult time, those who need money and have a strong syndicate of existing investors may get additional financing from them but even there, if some investors drop out, the others may not be in a position to cover the missing cash).
How will you continue to work with start-ups during and after these times? Is there a roadmap in place? Can you provide any examples?
GD: We will continue to review new investment opportunities but be even more cautious about companies which need to raise significant amounts of cash to get to break even. It will be very difficult for most start-ups to present realistic financial projections as we are living in a very uncertain time. We are holding many video conferences to progress on our due diligence but it remains open whether we would actually invest in a company if we never visited them or met the management team. There is only so much relationship building and team assessment work you can do over video.
Do you see a chance that these drastic changes to our lifestyle could result in a greater push for innovation?
GD: Longer-term, perhaps. Clearly those who are behind on digitization are suffering for it now.