Investments

Sequoia Capital Foresees Doom For Entrepreneurs As Coronavirus Takes Toll

Sequoia Capital warned of serious effects due to the coronavirus.

Venture capital firm Sequoia Capital warned in an email to entrepreneurs on Thursday that the coronavirus could potentially be the herald of a “prolonged” global economic slow-down.

Sequoia, known as a soothsayer of sorts for the industry, said the virus outbreak may fundamentally alter the business landscape of the world.

The editorial is titled “Coronavirus: The Black Swan of 2020” and recommended that companies start looking at saving cash, revising sales forecasts and slashing costs for products.

The venture capital firm said many of its companies had already reported falling revenues between December and February, with many now at risk of missing financial targets this quarter.

Sequoia, a fixture in Silicon Valley for decades, and has funded companies such as Apple, Google, Instagram, DoorDash and more for decades. The financial crash of 2008 was predicted similarly by Sequoia, which sent an ominous email simply titled “RIP Good Times” during the depths of that recession. The email is still referenced in Valley circles now.

This latest missive sees Sequoia drawing parallels to the economic strife of the early and late 2000s, with the firm saying it could be some time before the virus is fully contained, and it may be even longer before the global economy is fully recovered from the effects of the various slowdowns the virus outbreak instigated.

Suhail Doshi, a founder of Sequoia-backed Mixpanel, called the missive in a Tweet a mix of the “RIP Good Times” email with the new coronavirus threat. He wrote, “Founders about to learn the survival skills of ’09.”

A startup in Sequoia’s portfolio, Ironclad, said it was going to take a look at its strategy for 2020 after the news. But that company, which works in software to automate legal processes, doesn’t foresee a great impact because it has yet to tap the $48 million raised from Sequoia.

Airbnb, the home rental startup, said it had seen a decline of around 80 percent as Chinese customers canceled plans due to the virus.

——————————

LIVE PYMNTS ROUNDTABLE: MODERNIZING & SCALING FOR THE NEW NORMAL

The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

TRENDING RIGHT NOW