Remote Investing

As we begin to create a “new normal” for life with Covid-19 (coronavirus), there is a lot of discussion about how “work” is going to change.

During the peak of the outbreak, to comply with stay-at-home orders, many who could would work from home- did. This was especially relevant for tech companies who already used various collaboration tools to enable long-distance team work. In some cases this transition seemed almost natural. Some even argue that the pandemic has sped up market adoption rates by as much as 10 years for these tools, essentially changing the nature of work as we know it.

It would seem to me, that this can work well for pure software companies. However, for hardware being developed in the shop or biotech being developed in a lab, things are a little more complicated. Indeed, many parts of the innovation can be outsourced these days, but the core science needs to be done within the company. And, at the end of the day, someone, somewhere, needs to get in the lab to run the experiment and record the results. Most of us cannot do this at home.

Across our portfolio we have seen different approaches to the work-from-home situation. Anyone who could accommodate did, and most have shared only limited dips in productivity or even improvement. This seems to support the research about time wasted in traffic and the stress it creates, taking a toll on the productivity of our teams.

As someone who has been working out of the home office for almost 10 years, this was a non-issue for me. I knew how to hold video conference calls and had a comfortable working environment where I could be productive. I was more than happy to spend less time in traffic or at coffee shops for the two-days-a-week of meetings-in-person schedule which I was keeping. But I do miss visiting the portfolio companies. The insights from being on the ground are vital to providing good counsel to a CEO.

For us, the biggest challenge so far has been the inability to meet with founders of potentially new portfolio companies. It is much harder to assess the passion, conviction and nature of a founder when you only meet virtually. I remember this from my early days as an investor when I was reviewing companies with the team at TechU, where everything was done by video conference. I needed to “feel” the team to get comfortable. So when we set out to start our own fund, we made this a priority. At Sapir VP we are deeply engaged with the founders since we see ourselves as part of their team. We don’t dial-it-in, figuratively or literally.

As such, while we have been very active as investors during the pandemic closing a new investment each month, this may change in the near future. As we move forward with the opportunities we had engaged with before the pandemic locked us at home, and look to move forward with newer opportunities, even the ones we really like, we find harder to commit to. The concern is not about the tech, the market or the terms of a round. Rather it is truly about the people and whether we are a good fit to support them on their journey.

At the moment, we are trying to overcome this hurdle by spending more time with these founders, online. This has slowed down our process. It is frustrating to us just as it must be for the founders we are engaging with. I am sure we will miss out on working with some great teams because of this, but I prefer not to keep them hanging if we can’t get there at the moment.

What should I do during a Pandemic?

A month ago we sent out a letter to all of our portfolio companies regarding the novel Coronavirus pandemic (COVID19). Our intent was to show our support, offer practical suggestions and make ourselves available to help them wherever needed.

It is hard to believe that it has only been a month, but the world truly feels like a different place. We recognize that the current situation, while improving, is not going anyway soon. Despite the optimistic voices around the table or on the news. So, as we look to develop long-term strategies and new ways of doing business, we went back to review what we wrote at the time.

Here are some excerpts which we thought are still relevant:

The world is a different place than it was when March 2020 began. We hope that you and your families are safe at home, with plans to stay there until we can overcome this pandemic. I wanted to take this opportunity to share our perspective on the start-up ecosystem and share updates from SapirVP.

I am sure you have all seen the famous “Sequoia letter of 2020”. In a step which mirrored their approach to the downturn of 2008, the experienced firm shared their perspective and recommendations to their portfolio companies. These are good insights and valuable recommendations which I suggest you consider for your companies. The full letter can be found here.

While we are hearing other voices that do not completely align with Sequoia’s, we believe the following:

1. You need to prepare for the worse-case scenario.

2. You need to take advantage of this situation to enhance every aspect of your company.

To break this down to practical considerations: Regarding #1 the assumption needs to be that there will be significant, and potentially long-term, market disruptions on all fronts – customer interest, supply chain and fund raising are the most critical to an early stage venture. Regarding #2 – this is the time to refocus internally on product development, learn the voice of your customer through interviews and position your offerings for better market-fit in a changing world.  We are forced to stop, take stock and adjust.

This is also an opportunity to make improvements to your team – trimming (only) where necessary, cutting those who were not pulling their weight and hiring great talent that was hard to come by just a month ago. Of course, maintaining a positive culture is critical. Our approach has been to frame these steps as a way to boost the company and rally the troops to your mission. Protecting your employees as much as possible (safety and financially) is a solid way to lead by example. Choose to maintain a positive attitude and seek out the opportunities this situation has created.

These times call for swift and decisive actions to preserve what you have built while positioning your company as one of the few still standing, prepared to take advantage of the world post-Covid19 impact.

We all need to adapt. SapirVP remains engaged in evaluating new opportunities and closing investments to which we had committed before the world went into lockdown. But we are also reevaluating investment strategies so as to provide these companies with the best starting position to weather the storm.


Stay safe. Stay healthy.