[DECODE] A quarter of the fund portfolio positively impacted by the coronavirus crisis

by bold-lichterman

Last week, Chausson Finance launched its barometer to analyze the reaction of investment funds to the Covid-19 coronavirus epidemic. It thus emerged that the majority of them expect that the current crisis, which should last nearly six weeks in their eyes, will generate lasting effects, without however disturbing their priorities for more than two months. This week, this barometer highlights new indicators giving an overview of the morale of the troops within the funds.

Among the new lessons, more than two thirds of European and international funds continue to process deal flow. However, nearly half prefer to delay given the economic uncertainty that hangs over the health crisis. Good news nonetheless, the funds estimate that only 17% of their portfolio will need to be refinanced in the coming weeks, while nearly a quarter of the start-ups they support are positively impacted by the current context.

Investment priorities that evolve in line with new uses

But beyond the immediate effects of the crisis which push funds to secure their portfolios, the epidemic is leading them to review their investment priorities, modified by the booming digital uses due to the confinement imposed on a large part of the planet. Thus, if investments in the travel, events or advertising industry are no longer a priority in the immediate future, remote work, EdTech, cybersecurity, entertainment, productivity or even gaming are getting the attention of funds right now.

Because these new uses can potentially impose themselves over time, they constitute particularly lucrative fields of investment, insofar as these are sectors which are not confronted with problems of physical movement. It is no coincidence that videoconferencing platforms have enjoyed spectacular success since the start of the epidemic, Zoom being the most popular with funds.

Even if the funds appear relatively calm during this particular situation, this does not prevent them from asking questions about the impacts on new investments, their portfolios, fundraising and valuations. Evoking “a certain reluctance“, Cédric O, the Secretary of State for Digital, had recognized last week that the funds could be tempted”keep reserve and let the crisis pass“. However, he called on them to “take their responsibilities», By continuing to invest in start-ups. “We know those who play the game and those who don’t», He indicated. And to warn: “If they don’t, it will be duly noted.The message got through, as the government announced a € 4 billion plan to help start-ups cope with the economic consequences of the coronavirus crisis.

VC-19 barometer produced by Chausson Finance. Credit: Chausson Finance.

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