Did COVID actually impact dealflow?

6 min readOct 19, 2020


Authored by Victor Gutwein & Luke Skertich

Let’s hop in our time machine and go back to the middle of March (agreed, it feels like years ago)…

Source: https://giphy.com/gifs/tcm-tcmff-science-fiction-film-tcmff2020-chPWemdEXVzD0Zhcce

In the middle of March, we had something on our mind — no not toilet paper, though it was definitely up there — but rather ‘impact’.

  • What impact would COVID have on getting back into the office and meeting founders face to face?
  • What impact would COVID have on portfolio performance? Is this a 2009 vintage or something else?
  • What impact would COVID have on the lifeblood of our industry — dealflow?

It was easy to have angst going into the pandemic and even easier when we hit the second wave. In hindsight, we’ve used our emotions to influence our memory. Often, on calls with other investors we say things like ‘yeah, we hit a lull in April / May and saw things pick back up in July’ or ‘we took time to focus on our portfolio companies and didn’t pick our heads up on dealflow until a couple months back’. While these sentiments are fair, we set out to use data at M25 to answer the question “Did COVID actually impact dealflow?”

Real quick, what’s dealflow?

The rate at which pitches are being received. We see opportunities from other VCs, accelerators, incubators, universities, other founders, LPs, conferences, demo days, service providers, cold outreach by us, and cold inbound emails from founders who are raising. For our firm, we generally invest in software and digital technologies, so our numbers and observations will be geared towards those types of companies.

2020 in context

First, let’s look at this year in context. Dealflow certainly took a bit of a hit but overall sentiment around it being hit was worse than reality. Using a 4-week rolling average (which we will use throughout), you can see a slight dip in the total number of deals in late April, early June, and more severely in early July. Is it strong enough to show causation? Not really when we put it in context with this year vs. past years.

Footnote: This data represents the difference between deals seen this year vs. the average number of deals seen from 2017 through 2019. Positive values mean we saw x number more deals this year and negative values mean we saw y number less deals than past years.

Ironically, dealflow in 2020 has been better for us on average. Sure, part of this has to be that we are entering year five of the firm and investing out of our third fund — since our founding, we have generally grown our dealflow year over year. Still, we’re seeing significantly more deals throughout 2020 than prior years, and that was… unexpected. Let’s break down each month of the pandemic to gain a better understanding!

Covid Emoji Timeline


March was the calm before the storm. COVID was being uttered as a whisper at the beginning of the month and nearly became taboo by its end. Investors geared up for the potential impacts but dealflow was largely unaffected. We knew we’d be inside for at least a couple weeks, but had no idea what the far-reaching consequences would be.


We found that many of our own startups stopped fundraising — and notice a trend here as well as dealflow declines in the latter half of the month. With no in-person events, accelerators and universities pushed off pitch events normally planned for the spring. We also noted that some coinvestors took a pause on investing, supporting portfolio companies through internal rounds and facilitating PPP loans.


COVID forced accelerators, incubators, universities, and other organizations that support startups to initially move their dates to the fall — and then with the continuation of social distancing measures, to entirely virtual mediums. And this Herculean effort takes time! Virtual events didn’t take a front seat until July / August. While events hit a lull, we were intentional about digital outreach to accelerators & incubators, universities, and coinvestors. Nurturing these relationships proved vital, heading into the fall.


Holy smokes, dealflow doubled. Markets were up, masks were off, and everyone was patting themselves on the back.

We collectively believed the number of cases would continue to decline…


But boy were we wrong! Dealflow took a hit before virtual events kicked in. We find that warm introductions from co-investors (other VCs) gained traction and that cold inbound emails ultimately cycled with waves in COVID outbreaks, though on a slight delay and with less strength after the second wave.

Footnote: We split out Coinvestor on it’s own though it would traditionally fall under Warm (Community Champion, Founders, Personal Network, Service Providers, etc.). Cold includes inbound from introduction to founders from folks we don’t know, direct emails from founders, and inquiries on our website form.


We typically see ups and downs in our dealflow every year. However, dealflow was especially sensitive in 2020. We’ve attended events like gBETA Musictech Pitch, Illinois Ignite Pitch Event, Wildfire Demo Day, the Renaissance UnDemo Day, the Renaissance Cybersecurity Pitch Event, and some hosted by Techstars, among others.

Footnote: We count outbond as inorganic connections that we create when researching Midwest startups that are at our stage (pre-seed / seed).

Historically, we see more deals in the fall due to the heavy conference season, demo days, pitching, etc. This year, we’re seeing 3 times more. We tip our caps especially to our friends at gener8tor for their impressive array of events and Sandalphon Capital for the ambitious Midwest Tech event they launched this year, giving visibility to hundreds of Midwest startups!

In hindsight, we naturally doubled down on relationships with accelerators, incubators, and universities as COVID reared its ugly head in early March. We observed more cold emails come in than we normally do, and we had a lot of help with outbound opportunity generation from partners across the Midwest (takes off in July and explodes in August / September).

Our perspective is that it’s really not all doom and gloom. Dealflow has remained largely unaffected by COVID other than for select specific sectors like travel whose metrics are too soft to prove product market fit. COVID forcing more digital events may also bring startups greater visibility than they previously had in the long-term (i.e. we’re on our way to creating a more equitable ecosystem 🤞). Finally, tech is getting massive tailwinds from the remote world COVID forced on us in both private and public markets.

We’ll surely be keeping an eye on the data to see how COVID continues to affect the world of startups and the world at large!

About the Authors

Victor Gutwein

Victor grew up in northwestern Indiana before moving to Chicago to study economics at the University of Chicago. Victor has a passionate history with startups, including a vending machine business and kick scooter company, along with being on the board of UChicago’s first student-run venture fund. A Kauffman Fellow (Class 22) and former leader in Hyde Park Angels, Victor founded M25 in 2015 and quickly grew it to become the most active venture firm in the Midwest. Victor lives with his wife and two kids on the South Side of Chicago and loves staying active with running, biking, swimming, backpacking and any team sport you’ll let him join. If he can’t convince you to break a sweat with him though, he’ll usually succeed in getting you to try out a Euro-style board game (like Settlers of Catan) with his friends.

Luke Skertich

Luke grew up in the Western suburbs of Chicago and earned his Bachelor’s degree in Bioengineering at the University of Illinois at Urbana-Champaign. He developed a keen interest for academic research in undergrad, which laid a solid foundation for his approach to product development in tech. Before coming to M25, Luke found a passion for exciting entrepreneurial ventures. He worked as a Product Manager at three B2B tech start-ups in Chicago, spanning the benefits administration, fintech and human capital management spaces. Luke is actively involved in fundraising and volunteering for Easterseals DuPage & Fox Valley. He is currently an MBA candidate at the University of Chicago Booth School of Business with concentrations in Finance, Entrepreneurship, and Strategic Management. In his free time, he enjoys travelling, science fiction novels, hiking, woodworking, & staying active.




VC focused on Midwest early-stage #startups. Objective and analytical investment process combined with a risk-mitigating portfolio theory.