Hey Venture Capital, Now Might Be a Good Time to Grow Up.

It's become clear that things just shifted from a very employee-centric market to an employer-centric market and from a founder-centric market to a VC-centric market. And it happened swiftly. As a former psychotherapist, something I've always found to be certain is that true character comes out when times get tough.

When you raise money as a founder, you'll hear a lot of VCs talk about their ethos or how much they care about people and the world. Then, in times like these, you'll see a herd mentality that thinks it's time for bargain shopping and pushing entrepreneurs who started funding processes into cheaper deals (of course this is not everyone, but it's beyond a fair share). One thing you need to be cognizant of as a VC is the content of your character. This seems like a straightforward statement, but I can promise you that countless studies have shown that we're not as aware as we think we are and the best way to actually be aware, is to keep ourselves in question. So yes, this is visibly a numbers game for us all, but you can't change the fact that COVID-19 or not, it's more than ever a human game. The evidence showing that human experience has surpassed other notions of economic drivers is profound. Meaning, seek to understand, empathize, and take care of the people around you and the numbers will speak for themselves. AKA, it's in your best interest to not be a douche bag. Yes, I said it.

Many founders (especially in earlier stages) are scrambling to adapt to the current climate: if you're searching for a bargain, just say it. People spend their life, relationships, and savings working to build their dreams that we all call a startup. If you're only looking for bargain deals right now, tell them, and if they take it and are happy because they needed it, great. If you start posting "we're open for business" but want to dance a long bargain-driving negotiation dance in times like these, you literally might be a part of the reason a company failed because they decided to take your interest seriously and focus on you as a viable option. Consider your position and take responsibility accordingly.

The best thing you can do to be both fund and founder friendly is to be very direct with what types of deals you are entertaining now and what types of numbers you need for your fund to make it work on your end given the unknowns of this climate. Like in couples therapy, when it's all on the table, we empower each other to make timely and coherent decisions that ultimately serve both parties. Again, you'll be doing yourself a favor.

In the same way that advertisers who continue to be aggressive in a downturn come out on top when they get to the other side of the "U", VCs that are humble, fair, and straight forward with startups will be remembered on the other side of the "U". (This principle also holds for the employers and startups out there who are taking advantage of this situation as well- treat employees with humility, fairness, and be straight forward even in difficult decisions).

Different than 1999 or 2007, other than gas prices, there is no real economic mechanism for this issue as you read this. There is a sociological, health care, and soon-to-be mental health issue taking place, yet some are operating as if the economy is crashing and the employer / fund market dynamics have entirely shifted. They haven't empirically, not yet- just like the stock market, it's perceptual as of now. And there is a very good chance that come mid-summer, everything could be back on track given that there aren't fundamentally broken aspects of the economy (yes, there are certainly things that aren't perfect, but again, it's not like 1999 or 2007 and one can't treat it as such). Sure, there will be repercussions and a new norm will exist: behaviorally, sociologically, and psychologically. It's just good to remember that people don't forget how you show up, especially when there's turmoil or hard times.

And herein lies your opportunity.

You all have an opportunity as a community to bring a large breadth of maturity and help to many founders during challenging times. And I'm not talking about funding. You have knowledge, resources, access, and contacts that can help businesses thrive that might otherwise pass on. You can be the Jimmy Iovine of venture capital and connect great companies with great technologies that can solve real problems that exist as a result of COVID-19 who would otherwise never know each other (this is something one of our investors has already tackled and done a great job with). The reality is that many startups that came out to "play startup" will fall away, including those that would have become viable companies in a bull market. Prior to the COVID-19 event, the number of startups has been on steady decline as I'm sure many are aware, especially in the US.

It could hypothetically be true that there will be even less once COVID-19 settles and the world opens back up for business, making the market an even more founder-friendly ocean again. The best thing you can do as a fund to attract top businesses is to be that fund that was honest, forthright, and helpful in times like these. Be honest with yourself, take time to read the mission statement you have posted on your website, and be the fund that the best companies remember was incredibly helpful and had integrity during this time. Just like companies that lean into spending on marketing during downtimes, you'll be the fund the best startups remember on the upswing (and it might just be closer around the corner than we all think).

Whether we're VCs or founders, we have to remember that if we put people over short term profits, the long-term success and value will follow. (I can also promise, as a former psychotherapist as well, that you'll selfishly sleep better at night, and thus live longer. And in times like these, one thing we all still most definitely need is our sleep). Stay healthy everyone. And don't forget, we're all in this together.