Venture capital in a time of crisis

In March 2020 we were on the verge of launching an green EIS impact fund called OnePlanetCapital. After 8 months of planning, sourcing partners and developing the game plan we were literally days from going live and starting to raise funds….and then Covid19 struck. The excitement of being about to launch a new venture and the real motivation of that being an environmental impact fund was immediately replaced with the realization that nothing in the investment world would be normal for a long time.

EIS funds are obviously reliant on investors, and most investors will be badly affected by the pandemic in terms of their portfolios and their general investment holdings. This will obviously make high risk and early stage investments less attractive right now. Many start-ups will have problems deploying their businesses at this time anyway. The effect is a deep freeze on start-up funding in most cases.

The other thing that is clear - any VC with exposure to early stage companies has to protect their existing portfolio first and foremost. Cash runways have to be extended, revenues will largely be down, and any fund has to back its strongest investments at this time.

So what does this mean for a start-up fund tackling the massive climate and environmental challenges that we face?

 In reality we are in the same boat that many start-ups would face. We have to keep conversations with investors going, keep momentum and raise when the time is right. The Coronavirus pandemic has created short term chaos, but hopefully it will not be more than that. The long-term challenges remain and we have to tackle them. In many ways the pandemic may strengthen our hand in the long run – it has shown just how vulnerable humanity is. It has demonstrated the need for global solutions to environmental problems. Insights into how Co2 emissions and pollution have been so quickly reduced as a result of decreased human activity have no doubt inspired many and created pause for thought.

As per the recent key principles put out by the Committee on Climate Change (https://www.theccc.org.uk/2020/05/06/take-urgent-action-on-six-key-principles-for-a-resilient-recovery/) – the government has to target the bounce back in terms of the industries that can take us where we need to be by 2050 in terms of jobs and climate change.

With the right policies the UK can come back stronger after this crisis. I hope that humanity in general will come back stronger and wiser after this pandemic. OnePlanetCapital too!