What a time to start a business. Lab and university shutdowns, travel restrictions, stay-at-home orders, nervous investors, and social distancing—the novel coronavirus has created a lot of uncertainty. How can scientific entrepreneurs plan and execute what may be the biggest move of their professional lives when no one even knows what next week is going to look like?

The monthly number of deals raising venture capital for young and start-up companies dropped 38% for the two months starting March 4, as compared with the four months before the COVID-19 crisis, according to a recent Harvard Business School study from Sabrina Howell of New York University, Josh Lerner of Harvard University, and colleagues (SSRN 2020, DOI: 10.2139/ssrn.3594239). The study has not been peer reviewed.

Most of that decline was in early-stage deals, and the deals that did happen were more cautious. “Venture groups fund less innovative firms during recessions,” the authors write.

That notion is corroborated by reports from companies participating in America’s Seed Fund, a program at the US National Science Foundation that provides grants to scientific start-ups. Senior program director Ben Schrag says a large number of firms in the seed fund’s portfolio have delayed or canceled fundraising rounds, and others have had them go poorly.


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