EVCA Growth Newsletter #1
Welcome!
Overview of newsletter
Welcome everyone to the first Newsletter of the EVCA Growth vertical. Hope everyone is staying safe and finding entertaining things to do at home. We thought, with all the extra time in quarantine, we could start a bi-weekly newsletter that brings you hopefully educational as well as fun information. We know you might have already subscribed to more newsletters than you care to read (SO THANKS FOR BEING PART OF OURS!) -- we’ll try to make this brief, thoughtful, and fun.
About EVCA
The Emerging Venture Capitalist Association (EVCA) is a non-profit dedicated to supporting the emerging (pre-partner) venture capital community. We have over 500 members across the US, representing technology investment firms from early stages to growth. Feel free to visit our website here to learn more: https://www.evca.org/.
Subscribe to our newsletter here: https://evcagrowthnewsletter.substack.com/.
COVID-19 News
Quick Stats (as of 4/27/20)
Major Updates
Trump unveiled a 3-phase plan to reopen the economy; no specific dates have been provided and individual states have been encouraged to determine what’s best for them based on local data.
Gilead’s remdesivir drug has shown early positive signs that it might be effective in treating COVID; the market has reacted overwhelmingly positive but more data suggests the progress to a market-ready drug is still in its early stages.
The study Gilead conducted did not have a control arm so the results cannot be compared against patients who did not received the drug.
Gilead was reported to have suspended a trial of remdesivir in China. The company has struggled to find patients to enroll in the study.
Other promising leads on COVID medication include Rohe’s Actemra and Regeneron’s therapeutic antibody.
Cares Act / PPP
For those of you that have been following the Paycheck Protection Program (PPP), you know it’s been a roller coaster every step of the way. For those who haven’t, here is a great overview of the CARES Act by Jason Kong from IVP.
The $349 billion program, designed to provide forgivable loans to help struggling small businesses keep employees on payroll, reached its funding cap less than two weeks after the SBA received its first application.
A breakdown of funding by geography, size, and industry can be found here. Interestingly, 74.03% of all loans are under $150k with an average amount of $206k. The largest percentage of approved dollars went to construction (13.12%), followed closely by professional, scientific, and technical services (12.65%).
The House recently passed a bill providing an additional $484 billion in CARES Act relief, including an injection of $320 billion to revive the PPP. The SBA has resumed accepting PPP applications from participating lenders again.
Some large hotels and chain restaurants like Shake Shack have come under fire for taking on loans through the PPP, and a few have returned the funding as a result. The SBA has since released informal guidance on “good faith certifications” for public companies with substantial market value and access to capital markets, making it unlikely that such companies will qualify for new funds. It is, however, unclear how strict SBA oversight and enforcement will be.
Many companies are looking at other facilities such as the Federal Reserve's new Main Street Lending Program, designed for firms with 500-10,000 employees and $10 million to $2 billion in revenue. Main Street loans, however, have different terms, including a higher minimum and stricter financial requirements.
How COVID is Impacting Software Spending
We’ve seen a lot of good data on software spend emerge recently (let us know what you’ve been reading / thinking about)! The highlights include:
TrustRadius’ survey on how companies will change their software spending:
Unsurprisingly, software tools related to remote work are seeing a huge spike in adoption, while businesses are evaluating cutting “non-essential” tools.
In terms of spending behavior by size of companies:
The larger the organization, the longer it takes to implement remote-work software. This explains why many enterprise buyers still plan to increase spending today; expect to see the spike in software spending to flatten over time.
Compared to enterprises, fewer SMBs plan to increase software spend according to the April survey.
50% of midsized businesses planned to increase their software spending back in March, compared to only 15% today.
But don’t worry -- it’s not all bad news! Data from Hubspot shows a glimpse of hope:
Hubspot tracks weekly insights from its 70,000 customers globally (near real time data); deals created and closed saw a notable rebound.
Sales teams and marketers are sending a lot of emails during the crisis and the open rates have seen a pickup in recent weeks.
Customer-initiated chat conversations continue to rise.
What this could mean for business strategy:
Customers are still looking to engage with companies; focusing on nurturing long-term relationships.
Focus on inbound sales to capitalize on marketing generated pipelines.
Investment Ecosystem Survey
We've noticed changes in our work environment, so we're hoping to learn more about yours. Help us answer a few quick questions here:
https://docs.google.com/forms/d/e/1FAIpQLSdWmDs8FiHmu6iuVhP9b6qbelgi-s7LGqg3DCPk2CghoJPnVA/viewform
We'll compile the data and share the insights we find in our upcoming newsletter!
Break Time!
It's been a crazy past month, but we're here to keep you sane -- some humor for your week...
AMA
We would love to get to know everyone in this group more personally as well as professionally, and we thought an AMA (Ask Me Anything) would be a great place to start. Russell and Jeremy will be the first guinea pigs -- with their AMAs coming in our next newsletter! Have any questions for them or topics you want to hear about? Submit them here!
Thanks Everyone!
-EVCA Growth Team
Jeremy Zhu (jeremyzhu@capitalg.com)
Russell Yue (ryue@higcapital.com)
Alexander Lin (alexlin1@stanford.edu)
Shaurya Mehta (smehta12@stanford.edu)