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March 31, 20 - 6:00 pm - LABS

Venture capital may enter downward spiral and recovery may take years

Venture capital investment may slow their investing cadence or tightened criteria as the markets shed value due to the COVID-19 pandemic. Photo: Shutterstock

After encouraging investors with robust numbers in 2019 and the first two months of 2020, venture capital investment may slow their investing cadence or tightened criteria as the markets shed value due to the COVID-19 pandemic, according to Valor Investe.

In 2019, Brazilian companies – mainly seed-stage-startups – received $2.7 billion in venture capital investments, an increase of 80% compared to the previous year’s total and 198% in comparison with 2017, according to the Inside Venture Capital Brasil study by fintech Distrito, reported by Valor.

Gustavo Gierun, co-founder of Distrito, an open innovation company linked to the Brazilian startup ecosystem, told the newspaper that investments that were already underway won’t be canceled, that is, venture capital fund managers should not be forced to return values to investors. On the other hand, he says, new investments and acquisitions must be suspended for now.