[YAN] Coronavirus, Markets, and Airmeet.com

This week's jazz:

  1. Markets reacting to the COVID-19 pandemic

  2. Cloud Capital: Investment in Airmeet's seed round

There's been an awfully long pause from my end for some time and I cannot help but vaguely pin this on well ... life. Moving on. Sharing an update from my end, I ended upgrading Notion and paying for it :) Mainly because I had actually exceeded the 1000 free-blocks limit and couldn't hit enter without Notion sternly writer-blocking me (pun intended).

Note: I strongly suspect my migration from Evernote to Notion to have caused such a pain, curious if anyone out there has migrated their entire Evernote and it works smoothly?

Coronavirus’ havoc

Last night, the World Health Organization (WHO) labeled Coronavirus outbreak as a 'pandemic'.

Things have been crazy for the past few days. Stock markets plummeting, city-wide quarantines in certain parts of the world, sinking oil prices, and the lingering threat of …

"Bloomberg Economics created a model to determine America’s recession odds. The chance of a recession within the next year now stands at 53%, the highest reading since the U.S. exited the Great Recession in June 2009 and significantly higher than the 24% seen in the prior month."

Avendus Capital, one of the largest Hedge Funds in India, has been unwinding its investments and hoarding cash- "the highest in several years" as reported by Bloomberg Quint. The market volatility is anticipated to settle at the supposed 'peak' of COVID-19's pandemic cycle.

What about Bitcoins you ask?

"In just 48 hours from March 7 to March 9, bitcoin (BTC) fell 17 percent from $9,215 to a fresh two-month low of $7,628." - CoinDesk

So turns out that nothing's really predictable so far…

What I expect in the next few months in Startupland (Tomasz Tunguz, Redpoint):
Tomasz posted his take on what to expect in the coming few months within the Startup ecosystem. TL;DR:

  • Longer sales cycles

  • Remote working —> teams acclimating to new management styles and asynchronous communication

  • Marketing teams potentially saturating Lead Generation —> Pipeline creation gets challenging

  • Runway needs to be re-engineered

  • Fundraising will take a hit —> Conservative valuations assigned

  • Startups to suffer from a Bullwhip Effect: Any kind of delta in retail demand triggers big swings 'up' the supply-chain

Nobody Knows II (Howard Marks, Oaktree Capital):
Howard published his latest memo on 3rd March 2020, titled 'Nobody Knows II'. The title is an allusion to a memo he wrote on September 19th, 2008 "two days after Lehman Brothers’ bankruptcy filing. This is certainly an appropriate time to recycle it" wrote Howard.

Read Howard's memo here. For those who aren't aware, Howard has written insanely insightful memos and I have recently made it a point to start from the very beginning of his repository, all the way from 1990. Few highlights from his latest memo:

  • “In the real world, things generally fluctuate between ‘pretty good’ and ‘not so hot.’ But in the world of investing, perception often swings from ‘flawless’ to ‘hopeless’.”

  • “Not only were stocks hit over the last week, but so was gold. Since gold is supposed to be the ultimate source of protection in times of dislocation, I can’t imagine any reason why it should decline in sympathy with stocks in a market correction.”

  • “Intelligent investing has to be based – as always – on the relationship between price and value”

  • “What I think we do know is that the coronavirus is not a rerun of the Spanish flu pandemic of 1918, which infected an estimated 500 million people worldwide – about one-third of the planet's population – and killed an estimated 20 million to 50 million victims, including some 675,000 Americans (history.com). Rather, it’s one more seasonal disease like the flu, something we’ve had for years, have developed vaccines for, and have learned to deal with.”

Worried Tweet… (Masayoshi Son, Softbank):
Masa resurrected after 3 years on Twitter to express that he's worried and plans to offer 1 million free COVID-19 tests.

Google translation: “It's been a long time since the tweet. I am worried about the situation of the new coronavirus.”

Even Y Combinator announced that its upcoming Demo Day event is moving entirely online due to COVID-19 concerns. While the broader sentiment and the narrative do seem worrying, Venture Capital as an industry is more 'cautious' than anything. VC is a multi-year game and while recession does make fundraising from LPs difficult, capital will always find its way to promising investment opportunities, especially the opportune ones.

Cloud Capital: Investing in Airmeet’s Seed Round

I started this week by announcing Cloud Capital's investment in Airmeet’s seed round which was led by Accel India. For those tuning in recently, I lead an AngelList Syndicate for early-stage investments via Cloud Capital.

You can find the official announcement of the investment here and go through a quick tweetstorm here: