Wilson said the second quarter of 2020 will likely go down as one of the most productive for the firm. Union Square Ventures has closed six founding rounds with startups since April 1, according to Crunchbase. That includes joining a $112 million investment round for the New York-based investment startup Stash.
Those deals closed at a time when social distancing measures prevented lunch and boardroom meetings, where investors and company founders typically get a sense of whether they want to work together.
“It has surprised me, honestly, I have seen a lot of transactions happen where we are meeting teams over Zoom and deciding to invest in them,” Wilson said. “In the history of USV, we had done that maybe three times before the pandemic.”
More than two-thirds of venture capital investors feel similar to Wilson, according to a survey of more than 100 firms released by Pitchbook Thursday. Only 18% of those firms said not being able to meet in-person has prevented them from investing.
There were 102 venture capital deals in the New York metro area in May for $1.3 billion total, according to Pitchbook. In January, there 121 deals totaling $1.4 billion.
Part of the reason investing hasn’t slowed much from the pre-pandemic months is the huge amount of capital some venture firms are sitting on, Wilson said. U.S. funds raised $46.3 billion in 2019, the second-highest annual total in the past decade, according to the National Venture Capital Association.
“Our job is to deploy capital, we can’t just sit on it taking management fees,” Wilson said.
But replacing face-to-face time with Facetime can still strain certain deals. The earliest type of funding round, the seed stage, saw the steepest decline in deals at the start of the year, according to a report from PwC and CB Insights. Newer companies have typically built fewer connections to investors.
“Funds right now will, by default, want to work with people they know and already have relationships with, even if another opportunity looks promising too,” said Nnamdi Okike, a co-founder and managing partner of the investment firm 645 Ventures. “That is something that founders now have to overcome and bridge that gap.”
Okike added that investors are using social media apps such as Clubhouse to recreate the serendipitous encounters typical of meetups and networking events.
Working via Zoom could have long-term consequences for technology investment, Wilson added.
“If you’re really willing to invest in somebody that you’ve never met in person, does that mean you could invest in companies in Asia or Africa?” Wilson said. “We haven’t taken that leap, we haven’t said, ‘Oh, we can do this, why does geography matter.’ But I do think that it is a logical question.”