How COVID-19 Has Changed the Way We Support Our Early-Stage Founders
Across the startup landscape, founders are struggling to address the unprecedented challenges as a result of the COVID-19 pandemic. Whether it’s trying to avoid furloughs or layoffs, getting employees to work safely, or managing supply chain bottlenecks, there is no shortage of critical issues with which young companies must now contend. But for early-stage founders, fundraising is almost always top of mind.
And the concern over future funding is likely even greater for startups outside of the coastal tech hubs, where there is less capital to invest and a typically more risk-averse culture. It’s no surprise that we are hearing from many founders between the coasts who are worried about their next round.
Our Revolution team has spent the last several months focused on efforts tailored to address COVID-19 related challenges. We have provided regular briefings on the evolution of the coronavirus and its impact on startups from Ron Klain, Revolution EVP and the former White House Ebola Czar. We have hosted industry-focused webinars to discuss best practices around reopening for business across the country. And across all our funds, we have been working nonstop with businesses to handle COVID-19-related challenges, often pulling in expertise from our legal, communications, and policy teams.
But given the persistent and acute concern around early-stage fundraising, we are announcing a new policy to help our early-stage Rise of the Rest Seed Fund portfolio companies: the Minimum Follow-On Commitment. If Revolution’s Rise of the Rest Seed Fund invested in your most recent round, provided you meet a few conditions, we will guarantee a follow-on commitment of at least our pro-rata into your next round. During these tough times, we want our founders to know that they can depend on us for future rounds. This policy will be in place for the next six months, to help bridge the companies we’ve backed, and maximize the number of jobs that can be created (or at least saved), as they focus on not just recovering, but reimagining a New Normal.
Startups accounted for nearly all net new jobs in this country. But since the start of the pandemic, nearly 70,000 employees across more than 520 startups have been laid off. And, according to a US Census study, applications for new businesses have fallen by more than 40%.
The Rise of the Rest Seed Fund portfolio is invested in more than 140 startups, based in 70 cities across the country. I am proud that we are able to offer them some certainty during a most uncertain time.
