By Mysty Rusk
Raising funding can be rough for early-stage companies, not to mention doing so during a pandemic and with global funding down from previous years.
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COVID happened a matter of days before our 2020 San Diego Angel Conference, or SDAC, where 53 angel investors would choose a startup from an original pool of about 100 to receive a $200,000 investment.
SDAC, one of the largest angel conferences and startup pitch competitions in the country, had to quickly pivot. In an instant, 12 months of planning had to be reworked as we shifted from an in-person event in a standing-room-only auditorium to a livestream on YouTube.
More steak, less sizzle in a Zoom world
As we focused on maintaining attendance virtually and training investors and entrepreneurs remotely, we started to discover the fundamental elements that remained, regardless of a new virtual platform and some seeming challenges that become opportunities. Following are some of the lessons from 2020 that we are taking into 2021.
For SDAC–and most angel investing groups–entrepreneurs standing in front of an in-person audience to deliver “the pitch” is a foundational aspect of the startup fundraising process. Welcome to startup pitching in COVID times where virtual pitches on platforms like Zoom are the new norm.
Virtual pitches bring their own set of unique challenges, since important nuances of a compelling pitch include storytelling and establishing a connection with the audience; much more difficult to achieve virtually. The pitching entrepreneurs also have to worry about the dog barking at the wrong time or the Wi-Fi connection freezing in mid-sentence.
What we discovered, however, is that the entrepreneurs stepped up and adapted. They provided compelling presentations and demonstrated resilience to rapid change–crucial traits for entrepreneurs.
We also quickly realized that the Zoom effect turned out to be an advantage, greatly expanding SDAC’s audience throughout the U.S. and internationally. Where we once viewed Zoom as a fix, we quickly saw it as an effective tool to expand our footprint.
Steak is up, sizzle is down
For SDAC, going virtual also impacted a critical dynamic of the angel investing process–networking.
The art of relationship-building will look a lot different in 2021. Typically, entrepreneurs and investors have numerous opportunities to meet in person, which was an advantage for the charismatic, outgoing entrepreneur who can work the room to build rapport with the investor group.
Continued reliance on virtual platforms will impact the benefit of personal introductions and the ability to make connections. This means less reliance on the sizzle of personal charisma, and a greater emphasis on steak attributes like market size and sales traction. Those entrepreneurs who can find ways to capitalize on their businesses’ strengths and stand out virtually will be the winners.
Recognize shifting tides
The tides for certain industries have risen and fallen due to the pandemic. New trends have emerged, and in 2021 we expect to see entrepreneurs addressing those new challenges.
SDAC is an industry-agnostic fund, but at the height of 2020 we focused more on what is essential by investing in food, water and health. This era has highlighted those areas we have taken for granted and are still ripe for innovation.
By the time the vaccines have been fully deployed, we will have spent over a year in this new normal of work from anywhere, changing education delivery, and e-commerce on steroids. The question is: What changes are permanent and which will snap back to a pre-COVID normal? Investors have begun to make their bets, widening their focus to collaboration tools, edtech and software that drives the digital transformation for small and medium-sized businesses in anticipation of a more permanent change.
Investors’ new litmus test
Investors bet on jockeys, not horses, and this became even more important for angel investors in 2020. Entrepreneurs who effectively led and navigated their companies through the pandemic will continue to stand out to investors. For entrepreneurs, resiliency, managing adversity and adapting to change that are magnified in uncertain times, are crucial skills, and investors will surely focus a keen eye on how companies have managed the pandemic.
Forge stronger bonds
Through all the challenges brought about by the pandemic, SDAC is seeing stronger bonds between our angel investors and the startups this year. The conference’s “we get to yes” culture is more evident than ever. In the storm together, we now share another common bond.
Mysty Rusk, director at The Brink Small Business Development Center for Innovation at University of San Diego, is founder of the San Diego Angel Conference.
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