Tech startups feel the Covid-19 pain as only 44 startups in Silicon Valley get funded in month

Tech investors appear to be getting less generous as the coronavirus pandemic riles markets, according to a new report chronicling the recent impact of the coronavirus on the industry. It found that valuation growth at Silicon Valley startups is slowing and investors are handing out fewer checks.

The report, released by law firm Fenwick & West, indicates that venture capitalists are becoming more cautious in light of the economic downturn.

On average, when Silicon Valley startups raised money this time last year, each funding round sent a company’s value up by 63%. In January of this year, before the pandemic hit, the average round saw startups’ valuations increase by 117%— more than double the prior-round valuation. But for startups in the region that raised money in March of this year, the price increase was just 46%.

Startups’ willingness to lower expectations may reflect the necessity of having cash in a time of heightened economic uncertainty, said Barry Kramer, a partner emeritus at Fenwick & West and one of the authors of the report. Many companies are eager to raise funds to see themselves through the coming storm—even if the prices are not ideal.

“Companies just like shoring up the balance sheet, just like people are stocking up on toilet paper,” Mr Kramer said. “It makes them feel better to have it in the attic.” Bloomberg