Sequoia Capital, the seminal Silicon Valley venture fund, has urged its startups to question every assumption about their businesses in order to survive the coronavirus threat.
“Coronavirus is the black swan of 2020,” said Sequoia, one of the world’s top venture capital firms, in a letter to founders and CEOs published on its Medium blog.
“With lives at risk, we hope that conditions improve as quickly as possible. In the interim, we should brace ourselves for turbulence and have a prepared mindset for the scenarios that may play out.”
Investopedia defines a black swan as a rare and unpredictable event with potentially severe consequences. It is often characterized by claims, after the fact, that it should have been predicted.
Black swan events are very rare and can cause catastrophic damage to the global economy. Often-cited examples include the advent of the personal computer, the internet, and the Sept. 11 terrorist attacks.
Moody’s Analytics already predicted that a coronavirus pandemic would be even more of a “black swan” than the global financial crisis and Great Recession of 2008-2009.
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A number of venture capitalists told Reuters they were already seeing a shift in the funding environment, with travel restrictions and quarantines disrupting crucial meetings and investors becoming more cautious.
“Having weathered every business downturn for nearly fifty years, we’ve learned an important lesson – nobody ever regrets making fast and decisive adjustments to changing circumstances,” Sequoia said in the note.