🔥 Fuego Capital 🔥 | Covid, a startup founder’s perspective

The ongoing global pandemic is the elephant in the room for every conversation we have. It’s the reason we’re having meetings through Zoom instead of in person. It’s the reason calls are being taken from living rooms and kitchens. It’s the reason every conversation starts with checking in that the other party is healthy and well.

We end every conversation asking founders how they’ve seen the coronavirus play out as it pertains to their ventures. We’ve found that founders think about the effect of Covid along three dimensions:

  • Customers
  • Employees
  • Funding

Importantly, our tour has focused on B2B software companies primarily in the fintech and cloud computing space – reflections contained herein are therefore relevant in this context and undoubtedly don’t apply generically to companies across all sectors.



The effect of coronavirus on revenues, of course, depends entirely on the nature of the business we’re speaking to and whether society locking down has led to an increase or a decrease in usage of the business’s product. Several companies we’ve spoken to create digital infrastructure which is becoming increasingly relevant with a remote future – these have seen an increase in revenue. Other companies, whose revenue models are tied to company headcount, have seen revenues dip significantly with businesses cutting their number of employees.

For B2B companies that rely on direct sales, there’s been a shift in go-to-market strategy – away from in person meetings/conferences and towards digital outreach. Conferences are being cancelled. In person coffees/beers aren’t possible. Companies are finding digital, remote ways to find customers, build rapport, and close deals.


Across the board, the digital-first young companies we’re speaking to describe an increase in employee productivity since the coronavirus lockdowns. Less time commuting. Less time wasted needlessly socializing. More time working. But also more fatigue created after weeks of working in isolation.

Approaches to mitigate this fatigue and increase employee non-work interaction have been varied – from creating virtual team happy hours to online board games. With many countries shifting away from completely strict lockdowns, companies are now increasingly allowing teams to spend some portion of their week in the office and the rest remotely, ideally maintaining the benefits of remote work with the sense of solidarity that in-person collaboration provides.

The real gap internally has come when on-boarding new employees where in-person cooperation is essential to building rapport and understanding a new company and job function. Again, companies have had to lean on not-quite-adequate remote collaboration tools in order to fill the gap and ensure new employees can be brought to speed and integrated well within the company’s corporate culture.


Funding for most of the organizations we’ve spoken to means Venture Capital and experiences in terms of this access to capital have been extremely mixed. General consensus is that there was an initial shock when vast uncertainty caused funding to freeze altogether but now things have shifted back to normal, or, if anything, there’s an increased desire to make up for lost time.

The good news for founders fundraising is that, ultimately, VC funds have a mandate to show mark-to-market increases on cycles of 7 – 10 years. There are VCs feeling pressure to deploy capital and they’re actively sourcing to proceed with new investments. Times of uncertainty have an outsized effect on large incumbent companies and agile startups are well positioned to provide value in these uncertain times.

The bad news for founders fundraising is that some VCs are having liquidity problems and needing to prioritize. In some cases, cash is going to bridge loans supporting existing portfolio companies instead of looking outside for more opportunities. In some rare cases, startups have found VCs backing out of signed terms sheets because their LPs are backing out, facing their own liquidity problems.


The coronavirus pandemic that we’re experiencing as a global community is a black swan event, disrupting the globe and posing both social and economic challenges. The future is uncertain and highly geographically dependent – for startups this landscape is no different. Startups benefit from being young, not fully formed, and light in terms of cashflow needs. On one hand this low burn rate facilitates agility, on the other hand they’re at risk given a high dependence on revenue projections. Startups are scrambling to figure out what the future looks like in terms of sustainable growth, internal collaboration, and fueling their venture.

The pandemic has forced us to rethink business models – large enterprises and startups alike. For startups, a global decrease in liquidity has led to a shift in focus from chasing “growth at all cost” to “profitability and sustained runway at all costs”. The times of kicking the economic viability bucket further down the hill are behind us and startups that are able to adapt to this changing landscape most efficiently are able to differentiate themselves and attract funding more than ever before.

Of course, the verdict is still out on how consumer and business habits will change once the pandemic blows over, but it would be interesting to see how it sets the stage for startups and VCs to interact with each other and emerge as the next big thing.

One thought on “🔥 Fuego Capital 🔥 | Covid, a startup founder’s perspective

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  1. Excellent insights! Thank you for sharing. So many of these points are relevant to the way I am thinking about my own team and our collaboration, as well as across our and other departments.


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