Examining the post-COVID-19 Shifts in Startup Valuation Strategies: A Case Study of ABC Venture

Abstract

The "winter tech" phenomenon, marked by employee layoffs and technology usage decline in leading Indonesian digital startups like Go To and Traveloka, is exacerbated by the COVID-19 pandemic, causing a widespread economic downturn, and revealing financial instability. Despite government support, persistent challenges, notably the correlation between layoffs and startup failures, underscore the role of venture capital. The research focuses on understanding venture capital factors, limitations in valuation methods, and addressing the impact of COVID-19 on venture capitalists and changes in startup valuation practices. This research employs semistructured interviews, primarily with WJA, ABC Venture's Vice President of Portfolio Management, to explore the company's investment strategies. The chosen method aligns with the research objective, offering flexibility for comprehensive insights. WJA's extensive experience and leadership position make him a key informant. The study uses a five-stage thematic analysis process to comprehensively analyze themes related to startup success factors based on interview text. The COVID-19 pandemic has impacted ABC Venture's investments, leading to market corrections and a slower investment pace. However, the rise of online service businesses has increased investment, aligning with the global venture capital market's historic high in 2021. ABC Ventures responds with a cautious approach, emphasizing pandemic-related risk assessment in startup evaluation. They actively seek comprehensive plans from startups outlining strategies for navigating the pandemic before considering funding, focusing on online-centric models, and discovering the "next big thing".