2020 has been one heck of a ride for the business landscape and the economy as a whole, and it’s been a journey no one could have predicted. The impacts of COVID-19 led to stagnation, unemployment, and distrust in the markets, but as the pandemic has stretched on, the more dramatic impacts seem to be leveling out.
For example, the housing market is stabilizing, and returning to a more normal state of operation, after being turned on its head for months. Another world that saw a huge shake up was venture capital funding.
One recent analysis out of Harvard found that while many venture capitalists found the global VC market to be “completely locked up,” there was little actual impact on the ecosystem as a whole. Now, looking forward, what can we expect from the world of venture capital?
We looped in an expert in the field, Ryan Dean Hoggan. This entrepreneur, executive, and venture capital pro has almost 20 years of experience in these spaces, and now, he’s sharing five ways Venture Capital funding will change in 2021.
- The remaining distrust from the first wave of COVID-19 will level out
As we know, COVID-19 shook up every market on the planet. While many venture capitalists predicted dire outcomes for the VC landscape, some research has deemed that many of these more dramatic predictions didn’t actually come true, and that venture capital still helped fuel innovative young companies.
But that being said, there is still definitely uncertainty in the venture capital space. In 2021, Hoggan expects the rest of this distrust to peter out, as more confidence returns to entrepreneurs and venture capitalists alike.
- Series B funding will return to normal
While we didn’t see an overall tanking of the venture capital industry, we still definitely saw some tangible impacts of COVID-19 to the VC investment landscape in 2020, according to Hoggan. For example, research found that Series B deals took a big hit in ever genre of deal except for health companies.
This makes sense, because these health companies were in need of more late-stage funding. But as things normalize in 2021, Hoggan expects to see more of these industries receiving Series B checks.
- More entrepreneurs will be seeking venture capital
While venture capitalists might not have felt the pinch from coronavirus, it’s fair to say the entrepreneurs and start-ups which usually seek their funding likely did. Because of this, even though venture capitalists were open for business, there may not have been as many entrepreneurs or start-ups ready to look for funding.
As 2021 gets underway, Ryan Hoggan expects that some entrepreneurs and start-ups who held back during the pandemic will come forward, leading to a new wave in venture capital funding.
- There could be a few dips before things level all
All of this being said, Hoggan wanted to make it clear that we’re definitely not out of the woods yet. As the pandemic stretches on, there are waves towards economic normalization, that come with periodic setbacks.
Until the pandemic is fully declared over, Hoggan expects startups to continue to be wary of jumping into business with both feet.
- Certain types of deals are more destined for success in early 2021
Because of the state of the business landscape due to the coronavirus, not every venture capital deal is created equal. For example, we know that travel tech has taken a huge hit when it comes to Venture Capital deals, leading to a big decline in the industry, and what will likely be a slow recovery.
Therefore, deals in certain spaces are much more likely to pan out in a more normal way, while certain types of industries might be slower to recover.