Ran Neuner, CEO of OnChain Capital and host of CNBC Africa's Crypto Trader , today announced a $10 million emergency fund to help businesses struggling with the economic impact of the coronavirus – and to benefit businesses that can profit from the pandemic.
Neuner runs the "Runway Fund" with Yossi Hasson, the other co-founder of New York-based crypto fund OnChain Capital.
Neuner told Decrypt that other investors have "indicated" they will add another $90 million to the fund
Although OnChain specializes in blockchain startups, the Runway Fund (which is run by its founders but is legally separate) will invest in companies across a range of industries, as long as they are affected by COVID-19.
By 24. March have at least 400.000 people infected with the novel coronavirus, in which more than 17.000 people have lost their lives. Significant parts of the major world economies, including the U.S., U.K., Spain, France and Italy, are locked down, and many citizens must stay home. The International Monetary Fund has predicted that the virus will cause a global recession at least as bad as the Great Recession .
Neuner believes the fund will fuel some companies in tough times and provide more support than government stimulus packages can offer.
According to Neuner, two types of startups are affected by the virus. The first are those whose capital increase was delayed due to economic uncertainty. The second problem is those who boomed because of the virus' unique capabilities but "don't have the resources to take full advantage of it".
Hours after the fund's launch, Neuner announced that five deals were already on the table, including three blockchain companies: a lending platform, an exchange and a stablecoin. The remaining two are for a company that manages information for labs and a video conferencing company that provides real-time translation for multilingual meetings.
Neuner's fund takes a long-term view of the three blockchain companies, believing they will do well after the crisis is over. "For the startup that only has three months of capital left, they may have to either close the business or lay off their founding team," Neuner said.
As for videoconferencing and lab companies? Well, he's a venture capitalist after all. "To meet the demand – the market opportunity that coronavirus presents – they need dedicated funds," he said.
To speed things up, "co-founders in different industries" will help the pair figure out who benefits most from investments, Neuner said. And contracts are standardized: Negotiating different types of deals with different companies "can slow down the process" when a quick deal could keep companies afloat, he added. Companies can choose between a straight stock option or convertible interest-free loans.
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Neuner believes his fund stands out from others waiting for the market to correct itself. Although this is a smart move for VC funds, "as a startup, this is probably the worst thing you want to hear." And Neuner is not hoping for government stimulus packages. "Very few [startups] will benefit from the proposed incentive," he said.
Neuner's confidence in startups may reassure some at a time of uncertainty. "We will get through this and the markets will recover," he said.