Shift Magazine - April 2020 - 6

UNCERTAINTIES
OPPORTUNITIES
Mobility startups, venture capitalists plot
ways to weather COVID disruptions
BY PETE BIGELOW

rom the smallest scooter startups to the largest global
airlines, the coronavirus has wreaked economic destruction across nearly the entire transportation landscape.
No company has gone unscathed. The prospect of
reduced mobility in a quarantined world has rattled the most
stable of companies. But amid the uncertainty, venture investors
long enamored with the disruptive potential of new transportation technology are still searching for fresh opportunities.
"We're definitely still bullish on transportation and mobility in
the long term," said Julie Lein, a co-founder and managing partner of the Urban Innovation Fund, a venture capital firm that provides seed money to early-stage companies. "We're still talking
to entrepreneurs and deploying capital."
Data from PitchBook shows she may not be alone. Investors
pumped approximately $34 billion into startups during the first
quarter of 2020. Analysts from the financial data firm caution it's
not yet clear how much of that figure came before March, when
COVID-19 began shutting down much of the economy. Even with
a drop-off in March, the amount is still larger than the $22 billion
invested during the fourth quarter of 2019.

IMPACT UNCERTAIN

As with every other business sector, the impact of the coronavirus on fledgling transportation startups and their fundraising
efforts remains uncertain. While venture investors are focused
on longer-term goals and not quarterly returns, they're not impervious to the crisis. The duration of the shutdown may hold clues.
"There might be a bounce back if lockdowns are lifted soon,
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but if we're in a lockdown for two more months, the damage
will be catastrophic," said Olaf Sakkers, general partner at Israeli
venture capital firm Maniv Mobility. "We're in the midst of the
fog and trying to find our way through it. We're trying to mitigate
the damage, but few will escape it."
Sakkers and others say they place importance on in-person
meetings with founders of companies in which they are considering investments. Travel restrictions are making it difficult to vet
prospective investments. So venture capital firms are spending
time ensuring the companies already in their portfolios are set to
withstand recessionary forces.
Their trajectory may be a matter of timing. Startups that
stocked their coffers with fundraising rounds over the past six
months likely can afford to sit on the sidelines; startups that
planned to seek funds in the second quarter may face a more
arduous road ahead.

CASH CONCERNS

Reilly Brennan, founding general partner at Trucks Venture
Capital in San Francisco, says he's counseling founders in his
portfolio to stretch their financing plans. If they had anticipated
raising funds to last 18 months, it's better to seek funding that
will last for two years.
"One of the hardest things about this is that we don't know
how long this will last, so if they don't raise enough now, even if
prices are great, they could be out of business," he said. "So the
thought is they need to extend their runway."
In some sense, that's a reversal of conventional thinking,

Shift Magazine - April 2020

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