COVID-19 and the global venture capital landscape

We assess the effect of the COVID-19 pandemic on venture capital (VC) investments, documenting a significant decline in investments using a dataset of 39,527 funding rounds occurring before and during the pandemic in 130 countries. In line with our theoretical considerations, we show that this decline is more pronounced for investments characterized by higher uncertainty, namely investments in seed-stage ventures, industries affected more heavily by the COVID-19 crisis, international investments, and non-syndicated investments. Investor prominence partially moderates these effects. Plain English Summary A new study, investigating 130 countries, finds that COVID-19 influenced the global venture capital landscape in surprising ways. We assess the effect of the COVID-19 pandemic on venture capital (VC) investments, documenting a significant decline in investments using a dataset of 39,527 funding rounds occurring before and during the pandemic in 130 countries. Our study shows that this decline is more pronounced for investments in seed-stage ventures, industries affected more heavily by the COVID-19 crisis, international investments, and non-syndicated investments. However, prominent investors are affected differently compared to less prominent VC firms.