1Mby1M Virtual Accelerator Investor Forum: With John Frankel, Partner at ff Venture Capital 2021 (Part 2)

Sramana Mitra: What has been the experience at your fund in your existing portfolio companies as well as new investments?

John Frankel: We were very concerned in March and April that our companies would be hit hard. Some were hit hard, however, since we predominantly invest in secular rather cyclical businesses our companies held up incredibly well.

In Q2, if folks remember, the economy was cratering and the GDP was collapsing around the world. Our portfolio companies grew revenues 30% year over year on average. That is something that other VCs saw as well assuming that they invested in the more secular side of the economy. We are seeing this as an accelerant for other businesses and a pause for others.

For a few, it has been existential within the startup community for the type of companies that we look to back and support. We invested in a company out of Dublin, Ireland called Manna. They are a food delivery company by drone. Their business has been brought forward by about three years or so.

Similarly, another global company headquartered in the US but with a large office in Eastern Europe grew its revenues almost threefold last year. It was much ahead of expectations based on the acceleration you saw in e-commerce from COVID. 

Sramana Mitra: They are an e-commerce company?

John Frankel: They are an e-commerce enablement company. That is what we have seen. With the vaccine coming out, we expect the deployment to be non-linear but to grow over the months. We expect that within the US, we will have finished the deployment by May or June.

Canada had a surplus and said they would export. The US probably will too. Most of the world will have a vaccine by the end of this year. I hope that it would put a dent in this and that people would be comfortable getting back to their lives. 

Sramana Mitra: Are there any sectors within the tech startup ecosystem that has done well?

John Frankel: It is interesting because every company today should be a tech company and if it is not it will be overtaken by a tech company. When you say the tech sector, it is the whole business.

If you are a technology company helping out hotels or travel, your markets have been destroyed, but the recovery will be much more biased to the solution that you provide. As long as you get through the downturn, there should be a strong acceleration and demand in what you are producing. 

Sramana Mitra: As you look out to the post-COVID world, what trends are you particularly interested in?

John Frankel: The trends that we were interested in investing into the COVID world are very much ones that still resonate with us. These are applied AI, drones and robotics, and FinTech. This is about 60% of our portfolio.

However, if you think about what we as VCs do, we invest in changes in behavior and in new business models that provide a better way of doing things. We think that this downturn that we have seen will not only create great companies but also change the behavior of people.

There are companies that can take advantage of that. These are companies around privacy, companies around how to help businesses manage a more diversely located workforce, and companies around how people are re-evaluating what their home is.

We think that all of those changes in dynamics are going to come into focus. We think that there will be great companies that will be created in 2021 and 2022. 

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With John Frankel, Partner at ff Venture Capital 2021
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