VCs are using the coronavirus as an opportunity to exploit startups, according to Business Insider.

BI quotes a startup founder saying thar his investors would only inject new funds if a lower valuation was accepted. The founder is quoted as saying: “Valuation discussions have been ridiculous; it’s like they are trying to ***** us.” 

Matt Clifford, a cofounder of the startup builder Entrepreneur First,  describes “horribly exploitative” behaviour by some VCs.

VCs argue that it’s not their fault if markets change and they need to react to that.

A Europe-based VC told BI: “”It’s like buying a house. If market conditions change so that the property’s value is lower, then of course you want to pay less. We’ve been in an up market, so naturally people want more money. But now they have to accept the opposite is true.”

The VCs point out that they are responsible to their own investors who can get nervous as business conditions chsnge.

Its quotes another European investor, Michael Jackson, saying: “The fact is VC behaviour is often driven by LP (Limited Partner) behaviour. Of course there are some VCs acting unscrupulously, but many of the current funding issues come from the top down, and it’s natural that as money becomes scarcer, some funds and businesses will die.”

Brian Caulfield, a venture partner at Draper Esprit, says: “How do we get out of this vicious cycle? It’s simple. The brave investors who keep on investing (albeit at a slower pace) end up investing in some great companies at attractive valuations. As the world returns to normal and those businesses scale rapidly, VC returns improve greatly, and the asset class starts to look very attractive again.”