The global spread of the coronavirus is making the world more anxious by the day. And those deepening worries are reflected in the fluctuating stock market. Sequoia Capital, one of the world’s top venture capital firms, sent a note to the founders and CEOs in its portfolio last week warning that coronavirus could usher in a prolonged global economic slowdown, fundamentally altering the business environment and urging them to brace for coming economic shocks.
In sounding the alarm, the firm called the coronavirus the “Black Swan of 2020.” “Black swans” are rare, unexpected events that cause a massive impact and heavily influence global activity. It’s worth recalling that the phrase "black swan" gained currency a decade ago during the 2008 recession and aftermath, providing a compelling way of thinking about the simultaneous crises in banking and housing.
Sequoia has been a fixture of Silicon Valley for decades, helping fund generations of companies, including Apple, Google, Instagram and DoorDash. Back in 2008, as the financial crisis was starting to have a negative effect on the economy, the VC firm sent a similar, ominous presentation, titled “R.I.P. Good Times” to the founders and CEOs in its portfolio with the intention of preparing them for what was to come so that their companies could survive. The presentation is still referenced in Valley circles today.
Sequoia's memo this year provides guidance on how to run a startup so it can survive the business and economic challenges posed by the spreading effects of the coronavirus. Sequoia's advice to their portfolio companies is as follows:
Sequoia is saying publicly what many investment firms have been telling CEOs privately: It's now prudent to prepare for the worst.
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Short-form video streaming company Quibi said it has closed a second round of financing worth $750 million, bringing its total investment to $1.75 billion about a month before the service’s planned launch. The company said the $750 million includes about $400 million secured at the end of 2019.
NBCUniversal has sold its entire $500 million equity stake in Snapchat as it ramps up investment for its new streaming service. With the entertainment giants pouring billions of dollars into new streaming services while also balancing debt obligations, they are taking a hard look at their portfolios to find pieces that may not fit with their new strategies.
Rakuten and Vodafone led a $110 million investment in AST & Science. The company is planning to create a cellular broadband network with a constellation of hundreds of satellites called SpaceMobile that would link directly to people’s smartphones. The patented Low-Earth-Orbit satellite network will be the first of its kind, with enough power to connect directly to 4G and 5G devices everywhere on the planet, in remote areas on land, at sea, and up in the air.
Hailo, an Israel-based AI chipmaker delivering performance to edge devices, raised $60m in Series B funding. Hailo recently launched Hailo-8, its deep learning processor for smart devices operating at the edge including partially autonomous vehicles, smart cameras, smartphones, drones, and AR/VR platforms.