Drones Waft In A World Of Virtual Deal-Making

Why VC and PE transactions are taking longer to conclude and have got more complicated and intriguing in Covid times

- Pooja Sarkar

A drone flying over Bengaluru is unlikely to have you blinking in surprise but the sight of one hovering methodically over an expansive warehouse on the tech city’s outskirts may well have you scratching your head. Well, it’s actually just another (Covid) day at the (virtual) office for deal mavens; the drone over the Bengaluru warehouse was part of a due diligence process for a global real estate fund, with eager eyes in Mumbai, Delhi and New York watching the live feed on their laptops. (Due diligence is a process investors or companies undertake to understand the commercial and financial operations of their target company.)

Welcome to the virtual, and transformed, world of deal-making in a pandemic, in which venture capital (VC) and private equity (PE) funds are counting on everything from drones to chartered aircraft before closing a transaction. As India announced the strictest lockdown measure in the world in March, PE and VC fund managers were left with little choice than to make their dealmaking process completely virtual.

That’s an unimaginable scenario for many dyed-in-the-wool dealmakers. For instance, investment managers at Stellaris Venture Partners, an early-stage venture investment firm which focuses on Series A investments with a cheque size of $1 to 3 million, are accustomed to spending a lot of time meeting founders in both formal and informal settings. These meetings help build a relationship and also provide an opportunity to understand priorities and decision-making processes. Such meetings were essential to evaluate partnerships with founders.