In our continued coverage of the coronavirus’ impact on technology startups, we look back at 2008 to understand which investor groups pulled back the most when the financial crisis hit.


By pullback we are referring to the most active investors by investor type before the downturn, and how their investing patterns changed through the downturn and beyond to 2012. We believe analyzing how these types of investor groups reacted in 2008 may prove valuable as we try to troubleshoot what’s ahead in the venture capital world.

In a recent analysis on funding during the 2008 financial crisis we found 2009 was the low point for Series A, B and C financing. (Seed funding, which is a whole other story, grew over this time period.)

Series A, B and C dollar amounts in 2009 were down year over year by 40 percent, 41 percent and 46 percent, respectively.
A, B and C round counts in 2009 were down between 27 percent and 28 percent year over year.
Funding grew again year over year in 2010 and superseded 2007 dollar volume and counts by 2011, for the most part.
We look here at leading investors for each investor type by funding counts through the downturn. Leading investors in each cohort were defined by those most active by deal counts in 2007 before the crisis took hold.


Venture is the most established investor class in startups.

The leading 50 global firms cut back on investment counts by 15 percent in 2008 and 21 percent in 2009.
2010 and 2011 grew by 11 percent and 23 percent, respectively, with 2012 above 2007 investment counts for the top 50 firms.
The leading firms by investment count included Sequoia Capital, New Enterprise Associates, Accel, DFJ (now Threshold), Venrock and Kleiner Perkins. All these firms were founded in the 1970s and 1980s with a long investment track record along with an established portfolio of companies to tend to and weather the crisis. Accel raised $1 billion across two funds in December 2008 in the midst of the crisis–its London Fund III of $525 million and a growth fund of $480 million.

Andreessen Horowitz is the most notable leading venture firm formed in the aftermath–June 2009–raising its first fund of $300 million in July 2009.

PE and alternative asset managers pullback more
Private equity firms, investment banks and hedge funds were the second-largest investment class in private tech companies at this time.

The top 50 firms cut back the most by 29 percent in 2008 and 36 percent in 2009.
2010 and 2011 grew by 9 percent and 17 percent, respectively, year over year.
Investment counts did not recover through 2012 the time frame under review for the top 50 firms.
The leading firms in this category investing in private companies include IDG Capital, 3i Group, Oak Investment Partners, Goldman Sachs and DCM Ventures.

Corporate VC pullback early
For corporate venture we look at the top 25 firms.

The pullback happened faster with 2008 investment counts down by 32 percent and 2009 down by 9 percent year over year.
2010 and 2011 grow by 18 percent and 26 percent, respectively, year over year.
Leading firms include Intel Capital, Brand Capital, Bain Capital Ventures and Novartis Venture Fund. Corporate venture has grown substantially since the last crisis with GV (then Google Ventures) founded in early 2008, Salesforce Ventures in 2009 and Wayra from Telefonica in 2011.


Micro venture cut back by 28 percent in 2008 year over year and was flat in 2009.
Micro venture grew in 2010 and 2011 year over year by 36 percent and 24 percent, respectively.
Micro venture bounced back the fastest for these 50 firms as 2011 counts were way above 2007 levels.
Micro VC firms active at the time include SV Angel, Felicis Ventures, Uncork Capital (then SoftTech VC) and Floodgate.


Accelerators are an emerging investor group with Y Combinator, Techstars and JumpStart the most active in 2006 and 2007. Accelerators formed in the downturn period (2008 to 2009) were AlphaLab and Dreamit Ventures, and post downturn (2010-2011) 500 Startups, Start-Up Chile and Angelpad, and many others.


Since 2007 venture fund raises have grown more than fivefold when compared with venture fund raising in 2019. Leading venture firms have raised much larger funds in the billions of dollars, and more frequently in recent years. Alternative investors have also stepped up funding to get a stake in high-growth startups before they go public. In a bid to keep up with technology trends, corporate venture involvement in funding startups has also grown. As late-stage funding has grown, seed has also become its own institutional funding class with many new accelerator and seed funds formed in the aftermath of the crisis.


Will alternative investors (investment banks, hedge funds and private equity firms) take a step back as the IPO markets close? Will corporate venture recede as corporate HQs focus on the bottom line. In early 2019 GE Ventures worked to sell its whole investment portfolio as GE corporate faced a challenged stock, substantial debt and accounting issues.

Venture firms will have many portfolio companies with business adversely affected by the shelter-in-place requirements and its repercussions. Further, businesses will experience a slow down due to the recession.

There will be a reset in venture.

However, venture firms are well situated to take advantage of a different market; with funds to invest, less competition for deals, a clearing of the decks as competitors fail and lower valuations.

Next up we will look at how seed funding and late-stage funding is impacted by the health crisis.