Despite the Covid 19 panic, doing business in uncertainty has been the bread and butter of every venture capitalist out there; so why halting funds?
Yes, there is an epidemic going about, but has it really been different than the Dot.Com Bubble?
Did the 2009 subprime crisis hinder business completely?
About two weeks ago, we spoke about the fact that investors should wait before they sing their swan song.
We as business people cannot let this “hurdle” impact the way we conduct our ventures.
Risk management done right
Black swan events, such as this epidemic, cannot really be predicted.
One time it’s this industry that suffers, the next time it’s another one.
These scenarios give actuaries and statisticians a run for their money.
Insurance agencies will now need to cut cheques, as governments go for Quantitative Easing (QE).
But, how do we as investors hedge these risks, to begin with?
Risk management is easier said than done.
You need to run a good couple of scenarios, from volcanoes erupting to tsunami waves, to a CEO getting his/her hands inside the cookie jar.
Hedging your risks was never too easy, especially now with the Coronavirus going around, ruining businesses.
Investors must take a look at their portfolio, calculating whether or not they should continue investing the same way or look elsewhere for ROI.
Business in uncertainty – how to make due
It’s like a game of chess, but when you lose – it’s really hard to play again.
Some were less fortunate in their investments, and are now cutting their losses.
Others were not even giving away any money or prefered paying for breaching of contract, such as Sequoia.
Whether it’s investing less money or going for M&As (let someone else “pick up the tab”), this situation has affected the way in which investors approached new investments.
What are the alternatives though in which investors could potentially make high yields?
Going forward – no matter what…?
There are businesses which were about to collapse, but now are actually booming.
If you put your money in retail these past 18 months, you’ve done one of the better investments.
Should you be in the market though?
The peak has been the past week or so, when more and more people went for the supermarket, buying surplus of toilet paper.
It’s subsiding, but still going strong.
Booming markets – class of 2020
Most businesses which require people to attend physically have been in decline these past 6 months.
Anything from hotels to airports, seaports and the likes have been somewhat shut down.
Their stocks plummeting to the abyss.
But, some are actually booming right now and will continue going strong, such as:
- VR/AR and online meeting platforms:
- e-commerce/retail (especially the ones which implemented automation)
- Fintech (payment solutions)
- Digital health
Every now and then, we get pitches for businesses from almost any industry.
Now we even get options to buy out collapsed banks or no-occupancy hotels, going for a fraction of their original price.
A smart investor could definitely pump in smart money and help these businesses when they rise again.
Even Marriot’s CEO, Arne Sorenson, has been optimistic in his views of the future of the company.
It’s not easy, but it will be easier when doing business in uncertainty.