What influences angel and VC investments during a pandemic?

From thinking up an idea to making it a business, the entrepreneurial journey is one which is both interesting and challenging. Interesting because there are no set-in-stone guidelines that ensure success, hence, the freedom to explore and take risks while also avoiding mistakes.

And therein also lie the challenges, especially with external factors at play.

For entrepreneurs looking for support outside bootstrapping — family, friends, and fools funding which may be insufficient until profit is being made — the question on their minds would either be, “Do I have what it takes to get an investor interested in me for funding?” or, “Does my idea set me aside from other startups?”

To an extent, these worries are quite valid because entrepreneurs want to do all they can to get money. But it is estimated that less than 1% of those who submit business plans to business angels, venture capitalists, or similar sources of funding will be successful in raising the money they seek.

The factors at play

While the argument about which is more valuable is ongoing, it still depends on what different investors — usually angel investors and venture capitalists — look out for.

From a different standpoint, it seems this decision is sometimes influenced by prevailing circumstances — economical, environmental, technological, political, legal, and social — especially if they appear unfavourable.

A good case in point is the current pandemic that has seen the world’s economy nosedive. A Bank of America Corporation survey revealed that investor pessimism has peaked during this period in the US. According to the survey, the severity is extreme such that it is the highest that has been experienced since the 9/11 terrorist attack.

This means that, more than ever, investment decisions would be made based on critical analysis because investors would be hesitant to put their money into ventures. But at the same time, there are predatory investors who take advantage of entrepreneurs who may have come off as too desperate, as noted in this article.

Source: https://techpoint.africa/2020/04/29/investments-during-pandemic/