Do you think COVID‑19 will cause investors to change their check size or valuations for seed stage?

Adam SpectorFounder and CEO at Chore

Has COVID-19 Changed Investor Check Sizes and Valuations for Seed Stage Startups?

24 Jun 2020 · 2 min

Watch on YouTube

2:11

In this panel discussion, moderator asks whether COVID‑19 will alter seed‑stage investors' check sizes and company valuations. Irina responds that valuations will indeed shift—either up or down—depending on how founders adapt their business models, supply chains, revenue forecasts, cost structures, and pursuit of government aid. She emphasizes that founders are now being asked how they are addressing pandemic‑related challenges. Another panelist (Speaker C) adds that recent years have turned valuation into a vanity metric, arguing that early‑stage founders should focus on building great companies and partnering with supportive investors rather than obsessing over headline valuations, which have generally declined during the crisis. The overall message encourages founders to adapt operationally, seek investors aligned with long‑term success, and de‑emphasize short‑term valuation numbers.

Questions this video answers

Irina: Yes, valuations will change—higher or lower—depending on how founders adapt; founders are now asked how they are addressing pandemic impacts, with adjustments to supply chain, revenue projections, cost cuts, and government funding.

This next question goes back a little bit to COVID-19 and the pandemic. Do you think COVID-19 will cause investors to change their check size or valuations for seed stage? Go ahead, Irina.
Oh, I— yes, it will. I mean, the valuations are definitely going to change, and they could change for the— for higher or for lower. You know, and that's, that's, you know, the first question we ask anyone who comes to us right now, I guess in the last, let's say, 2 or 3 weeks, is what have you done to address this issue? And some of them have done, you know, my product is extremely relevant, so I reevaluated my, you know, supply chain and my revenue projections, and I'm actually going to be selling more, providing more services, or I've scaled back And I now evaluate in valuating how I'm going to get through it and maybe cut down my costs and apply for government funding. But that is definitely changing for everyone.
Yeah, no, absolutely. Valuation clearly once again has changed in many cases, unless you're an amazing business that's doing better in this scenario. The other thing though to bear in mind is, as a founder, I think valuation in the past few years became sort of a vanity metric, and one that frankly isn't all that relevant to your overall long-term success. It feels like something as an early-stage founder that you want to optimize for, because it's really cool to be the founder of a company that's valued by an investor at $10 million. Of course, it doesn't mean anything. It's all on paper. So, and frankly, I'd rather be the founder of an Airbnb or an Uber that raised at something like a $4 or $5 million valuation in 2008, than the founder of a company that raised at a $20 million valuation that's worth zero today. So, um, in the end, if you have a great company, find great investors who you care about, who can help you be successful. Don't stress the valuations. Yes, they've gone down. Who cares?
Yep, agree.