This crisis brought on by COVID-19 could be the most significant period of innovation engineering of our generation. To fund these innovations and amplify their impact, venture firms must usher in new ideas. They must explore new avenues to source deals, build relationships, and add value to their portfolio partners.
We are hosting a pitch competition to support the most innovative early-stage businesses in the employee health and wellness space. At a time when funds are tightening their qualifications for investing, we have evaluated the market and chosen to take this time period as an opportunity rather than a burden. We need businesses with fresh ideas in this space to succeed, now more than ever. Archetype Solutions Group is proud to be supporting that innovation with Pitch Well 2020, and we invite you to join us on our journey!
What’s New – Market Outlook 2020
The COVID-19 pandemic has caused seismic changes in global economies. The public health crisis, record job losses, and unprecedented market volatility has changed consumer and investor behavior. The premium on liquidity is as high as it’s ever been. Equities, fixed income products, and most safe-haven assets alike have fallen in value.
In short: The COVID-19 pandemic has thrown economies and financial markets into an unprecedented state of flux.
Why It Matters
Companies are maxing out lending facilities and slashing expenditures to gain stability and weather the storm of the most unique event financial markets have ever seen. This cash hoarding, “batten down the hatches” approach is occurring at a scale which far exceeds 2008. Q2 will almost certainly be the US economies’ worst ever quarterly contraction—one Goldman Sachs reports estimate at 34% of GDP.
It is not just the markets and consumers that are displaying recessionary behaviors. Public sector activity has plummeted, with rapid decline in M/A deal-flow and IPOs heavily delayed. Venture capital, too, will see some changes. Sequoia issued its black swan prediction to its portfolio companies, offering dire warnings about cash runways and ability to raise new capital. Seed stage companies face new challenges, with deal-flow declining from an inability to conduct in-person diligence and a higher bar for now-very precious cash lowering valuations.
The economic flux is having a profound impact on private equity and venture capital markets. Companies seeking capital will see it harder to come by and at less favorable valuations. Funds will see reduced deal flow, declines in portfolio company valuations, and drastic increase in portfolio company insolvency risk.
The Greatest Market Opportunity Since 2008
Innovation has become the most necessary weapon in the arsenal of VCs and their portfolio companies. No, not the hip buzzword that we all love to hate—real innovations that drive productivity and growth. Product innovation retains importance, but operational innovation is the new imperative. Companies must adapt their operations to a fundamentally different marketplace.
This makes the current economy the most exciting one in recent (or even lasting) memory. Agility and innovation will be forced to thrive, as the burn rate tolerable in 2019’s start-up economy is tolerable no longer. This agility will be more obvious than ever, as the best teams, products, and firms rise above their competition. It’s up to these companies, and their VC partners, to capitalize on this freedom (and need) to innovate. 2008 brought us Slack, Uber and WhatsApp amongst others. If that’s anything to go by, the brightest ideas coming out of the COVID-19 crisis could define innovation for the next 10 years.
With an in-person event no longer feasible, we’re deploying our agility in bringing our pitch event online. Pitch Well 2020 is the first of its kind online pitch competition in collaboration with The Wellness Council of America (WELCOA). It offers a new approach to venture capital deal flow and diligence. The most innovative players in employee health and wellness will compete for over $100K in equity funding. Watch it live on April 20th and witness a new approach to venture capital in action!