As negative headlines and gloom-and-doom opinions swirl about the future of start-up investment, the well-known venture capital firm 500 Startups has gone to the source by surveying nearly 140 early-stage investors. 

The results confirm some of gloom, while also providing context for how investors say start-ups can respond and how long the impact could last.

Nearly all respondents believe COVID-19’s impact on investment activity will be negative, with around 60% believing the impact will be felt for 1-2 years.

Cash flow is likely to be one of the biggest challenges start-ups will face to manage through the next 12-24 months, says Toan Huynh, Venture Partner at the fintech-focused VC Information Venture Partners. “Where possible companies should be drawing on lines of credit available through innovation banking offerings or various other debt instruments,” she said.  

Investors that participated in the 500 Startups survey also suggested decreasing costs, increasing runway, and focusing on customer retention. 

Information VP believes the technology companies that are relevant to financial services and those leveraging a software as-a-service business model will be at a unique advantage. “Financial services is one of the more recession-proof industries and continues to be one of the business buyers of technology. In addition, the COVID pandemic has actually accelerated the move to digital programs and created a new unprecedented level of urgency to move to the cloud and leverage technology to handle front office and back-office work,” Huynh added. “Those that are providing tools that are core to businesses and solving these complex problems will be more needed than ever as face-to-face engagement becomes less favorable in the current climate.” 

Other start-ups that may be at an advantage are those focused in areas affected by the coronavirus. Investors expressed heightened interest in healthcare and remote work solutions in the 500 Startups survey.