In a short panel, moderator SPEAKER A asks whether the COVID‑19 pandemic will alter seed‑stage investors’ check sizes or company valuations. SPEAKER B (Irina) answers that valuations will indeed shift—either up or down—depending on how founders adapt. She notes founders are now being asked how they are addressing pandemic‑related challenges, with responses ranging from leveraging increased product relevance, revising supply‑chain and revenue forecasts, cutting costs, or seeking government aid. SPEAKER C adds that recent valuations have become a vanity metric; the true measure of success is building a sustainable business with supportive investors. He argues that a lower valuation for a strong company (e.g., early Uber or Airbnb) is preferable to a high valuation for a venture that fails, urging founders not to stress over valuation fluctuations caused by COVID‑19.
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, 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 gonna be selling more, providing more services, or I've scaled back, and I now evaluate evaluating 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. Just like 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 a $20 million valuation that's worth zero today. So 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 evaluations. Yes, they've gone down. Who cares?
