Silicon Valley Revs Up for a ‘Hot Startup’ Summer

Venture capitalists behave a bit like oracles. They imagine the future, make prophecies about how we get there, and decide the fate of founders and startups. Usually, these divinations take the form of cash, showing where the VCs are placing their bets. But occasionally, they also share the prophecies with the rest of us, in the form of public writings. “Coronavirus is the black swan of 2020,” the venture firm Sequoia told its founders in a memo posted March 5. It was time to cut spending, reconsider purpose, and plan for the worst. “We suggest you question every assumption about your business.”

The last year proved intense for many startups: Many went out of business, others had to lay off tens of thousands of employees. Those that relied on in-person interactions (say, a travel-booking service) have gone into hibernation, while those that met pandemic needs (say, a direct-to-consumer cereal startup) have gone into overdrive. Many startups had to change drastically, reconfiguring their product and or pivoting to fit into the pandemic world. As Sequoia put it in its memo, the startup world mirrors biology in times of crisis: “Those who survive ‘are not the strongest or the most intelligent, but the most adaptable to change.’”

Now another change is underfoot. As millions of Americans get vaccinated and states lift restrictions around gathering, people are preparing for a Great Reopening by summertime. Comparisons to the 1920s abound. And that has led venture capitalists to make new prophecies. Sequoia, for example, sent out a new memo to all of its founders in recent weeks. The message? “Now is the time to start stepping on the gas.”