Yahoo Finance’s Melody Hahm joins On The Move to break down how venture capitalists are faring during the coronavirus pandemic.

Video Transcript

JULIE HYMAN: You're watching Yahoo Finance live. I'm Julie Hyman. The major averages, by the way, have now turned negative, with the S&P 500 off 2/3 of 1%.

Now, going into this coronavirus crisis, we talked a lot about private equity and venture capital, and the boom we were seeing. Would the WeWork failure to IPO cause a reckoning? Didn't seem to be. Melody has been tracking all of that out on the West Coast, which is the epicenter of the VC world. So have we seen a sort of reckoning that didn't come with WeWork maybe coming with coronavirus?

MELODY HAHM: Yeah, Julie. So of course, 2019 did cap off a record decade for VC. Aggregate yearly deal value actually grew by five times since 2009. And the momentum was still there going into 2020, despite a lot of what you pointed out, the reckoning that was happening when these valuations and lack of profitability.

But I actually have been speaking to several VCs here in the Valley, as well as in LA, who say this is actually a huge buying opportunity and a way to invest cheaply. What I mean to say is that entrepreneurs on the other side of the deal are more likely and more willing perhaps to be taking less-than-favorable term sheets, where they give away more equity, where they lose a lot of their rights and their voting rights in order to get that capital infusion right now to keep their companies afloat and to keep people on payroll, as we've discussed many times in this program.

But I have to say, the pandemic is a good cover for many startups that had unhealthy balance sheets going into this crisis. And we have seen multiple Medium posts, blog posts specifically saying, hey, we're wrapping here. The founder is stepping down. The CEO is taking a leave of absence, specifically with some digital media companies.

So I think this will be the proverbial separation of the wheat from the chaff. And the winners will be more fierce, and the losers will be more fierce. That middle ground that we did see over the last decade will likely disappear.

JULIE HYMAN: All right. We will count on you to keep tracking it. Melody Hahm, Thank you very much.