3 Ways the War in Ukraine Impacts Venture Capital
As we reported on Valor’s Q1 performance, many of our investors asked us about how the war in Ukraine affects venture capital.
We want to also share we stand with Ukraine. Aggression such as Russia’s toward its neighbor cannot be tolerated or condoned. We hope for a swift return to peace, security and prosperity for all those affected.
Valor’s investments are active in over 200 countries and employ 700 people–and many more contractors.
While we are considered a local investor in our region, the fact is we consistently back fast growth companies with the potential for global scale and global impact.
The following is a brief excerpt from our quarterly letter and performance report to share our thoughts with the broader tech innovation community.
How is war in Ukraine affecting venture capital?
We’re noticing three impacts to our strategy.
1. More capital deployed to tech because of Ukraine means more venture capital urgency.
The invasion of Ukraine is a terrible tragedy. One clear impact of Russia’s aggression is more urgency and more spending on technologies where we invest such as cybersecurity, fintech, digital health and Web3. You’ll see these themes most clearly in our investments in Vermeer, Arpio, Vital4, and Senteon. Two examples: Arpio offers a one-button recovery for multi-regional platforms, which is even more valuable as hacking increases. Vital4 is rapidly becoming a global leader in sanctions management.
2. Ukrainian and Russian tech talent on the sidelines means more VC-backed startups turn to the South.
Ukraine and Russia are both strong suppliers of technical talent in a global labor market tight for technical talent. Ukrainian and Russian coding talent is effectively off the global market now. Scare talent is only more scarce now. We believe this will continue to favor the work-from-anywhere trend globally.
Startups have an advantage in this talent situation because they often offer more flexible work opportunities. As corporate talent is pushed to return to an office lifestyle, startups are advantaged. The opportunity to snap up strong tech talent currently in the corporate world in the South is greatest, because the South enjoys a greater density of F500 corporate headquarters than New York and California combined. (Speaking of talent, please check Valor’s job board to see if we have any opportunities in our portfolio you’d like to refer to your network!)
3. War in Ukraine (and elsewhere) highlights the urgency of upgrading tech, often accelerating the path of venture-backed startups.
War-escalated interruptions in supply chain, energy, logistics and the looming threat of issues like Russian aggression emphasize the need for B2B software for complex systems.
Conflict increases the pace of decision making and pain of slower systems that don’t adapt with volatility. We’re seeing a trend to even more rapid adoption of technologies like those in the portfolio that help corporations be more resilient and successful, especially as inflation, shortages, and supply chain issues erode the profit margins of the recent past.
Particularly relevant investments for Valor that enhance corporate efficiency and competitiveness include Allelica, Sho.AI, Goodfynd, LeaseQuery and SmartCommerce.