Germany back to normal not before mid-2021

Our first Investor Index shows that VCs are worried about the survival of their portfolio companies

The Corona crisis is not over yet. 55 percent of investors expect the German startup community to be back to normal in mid-2021, between May and August. 27 percent even forecast the end of the crisis to be between September and December 2021. They are also seeing lower company valuations across the board and are worried about the survival of their portfolio companies.

That’s the result of the latest Investors Sentiment Index, a survey Bits & Pretzels, Europe’s leading founder festival, conducted in the last 4 weeks among several investors from its community. This follows onto the earlier Founders Sentiment Index (take part in this month’s survey here) and aims to fully understand the situation of the whole startup ecosystem.

54 percent of VCs indicate that at least 1 percent up to 10 percent of their portfolio companies will not survive the crisis. 18 percent of investors say that one fifth or more of the companies they have invested in, will come out alive out of this situation.

Companies are struggling and obviously startups need the support of their investors. The vast majority of investors (91 percent) has portfolio companies that have to deal with liquidity problems. Most say that 11 - 25 percent of their portfolio struggles. Even more shocking, about 15 percent indicate that up to 75 percent of their portfolio has to fight liquidity problems. 

During these challenging times, all investors agree on their main priority: consultancy of portfolio companies. But 27 percent also indicate that closing investments and closing funds is still very important. 

As all participants of the survey agree, company valuations are lower now and all of them are already looking at new opportunities. They differ in their approach to new investments, though. More than half (55 percent) have already invested during the crisis. 36 percent never stopped looking for new investment opportunities but halted investing, while only 9 percent have just invested as of recently. 

Although new investments are made, the volume of investments does not change a lot for most. Almost three quarters (72,73%) of investors are saying that their investment volume will stagnate. 18 percent see an increase in investments while 9 percent see a decrease. 

About half of investors (46 percent) are neither optimistic, nor pessimistic about the future. 18 percent pessimistic and only 36 percent are optimistic.