Page 45 - C:\Users\Tharindu Dissanayake\Documents\Flip PDF Professional\CMA JOURNAL 2021_compressed\

CERTIFIED MANAGEMENT ACCOUNTANT 45

“ COVID-19 has affected venture The above Figure 2 shows how VC can

break into five different stages of the
capital investment in SMEs
company’s life.
dramatically while the growth of the
The VC involved in these stages; from
business for survival is crucial during
stages. The VC has been fully involved
this crisis. seed, early stage, growth, and mature
in the early stage and growth of the
SMEs. Digital technology in the VC can
shift to the potential for growth since
6.2 Follow up on the funding 6.4 Leveraging and Technology the crisis has demanded innovation,
for the startups returns new entrepreneurial ideas, and high
The VCs are not interested in new VC investees often provide digital investing in essential services such as
business investments; however, they services, platforms, or deep tech healthcare and logistics. In this context,
are more concerned with providing solutions, and have the agility to pivot SMEs have started to adopt the digital
additional funds to the existing SMEs business models to react to the crisis platforms such as innovative digitization
for survival. There are challenges of (Strusani, Verma, and Manent, 2020). business model and increase in new
additional funding due to the travel Some SMEs are extra resilient and ready digital city consumers in the nascent
restrictions and non-performance of to take the lead throughout the crisis, market segmentation.
due diligence processes. IPOs have and the business also has an inherently
been reduced. The decision to postpone innovative strategy. The technology
investment is a very strategic movement innovation company can create benefits 7. Conclusion
due to the uncertainty in the world. to the VCs in the medium term due The COVID-19 pandemic has created
to opportunities and trends in the the worst crisis in the 21st century.
6.3 Limited Partners and post-Covid-19 period. The redesigned The severity of this decrease exceeds
fundraising strategic planning, post-COVID-19, the decreases witnessed in more
technical assistance, and operational
The institutional investors are not knowledge can be used to navigate the established markets for entrepreneurial
interested in the VC investment since it crisis readjustment (Brown and Rocha finance such as the US (Howell et al.,
involves risks on assets, whereas high- , 2020). The SME is trying its best to 2020). The financial performance of
net-worth personnel and family officers provide the best services to customers the SME’s asset has deteriorated due to
are expecting a super return on the by using the power of technology, the valuation deduction in the entity’s
investment. digitization and overall changes in the portfolio, foreign exchange volatility,
and challenges in existing investments.
business model. SMEs are requesting financial support

Figure:2 Venture Capital Investment to the SMEs. for the working capital for survival since
the entity had faced dry powder during
Funding rounds the prolonged pandemic crisis.

Seed Early Growth Late IPO The COVID-19 impacts on the financial
Series A, B Series D, E market will take over the global financial
crisis as it already has an impact on the
Investors look Investors look Investors look entire operation of the world. The global
for founders for consistent for strong nancial supply chains have been transformed
solving a need revenue and perfomance and willingness to to localization and diversification. The
ability to scale expan
level of dry powder in SMEs has been
deteriorating due to the prolonged
COVID-19 crisis. It has worsened the
Pravate Equity global crisis in the 21st century. For
Revenue Growth Equity been recognized as a central pillar
Break Even Point
over a century, uncertainty has long
influencing entrepreneurial decision-

Venture Capital making (Knight 1921). The length of VC
fundraising cycle was increased due to
the higher uncertainty in the market.
Angel Investors
However, a more prudent approach to
the long-term investment is requested
Accelerators / during the crisis. Public investment
Incubators has been reduced and every country
has budgeted a stimulus package to
Sources : Bradley Miles, Breakinto VC : How to break into Venture Capital?

www.cma-srilanka.org | Volume 06 -No. 2 - September 2021