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Last week, distributed a memo to founders and CEOs of its portfolio companies about the worsening economic situation as coronavirus spreads, and many other media outlets reported.

I’ve also seen posts all over from people cautioning about a slowdown in VC funding and reacting with concern to the tumultuous state of the public markets.

So I decided to ask around myself.

I didn’t get as many replies as I expected. Perhaps folks just don’t want to share their revised strategies. Perhaps they’re still trying to figure it out. I’m not sure, but for now, here’s what , general partner of Austin-based, told me on the topic. (For those that don’t know, Silverton Partners is arguably one of Austin’s most active early-stage VC firms with $384 million under management.)

Warning to executives

Flager shared with me some highlights of a note he sent out to key executives across Silverton’s portfolio this week.

Essentially, Flager said it is “prudent to assume that fundraising velocity will slow from the fast pace we’ve seen as investors take time to process the new macroeconomic environment.”

He pointed to what transpired economically in 2001 (after 9/11) and 2009 (after the economic downturn) as a reference to what people should likely expect to happen this year.

“Most investors react to uncertainty with increased caution. Travel restrictions will also make it more difficult to meet investors,” Flager wrote.

Additionally, he said that valuations will likely see pressure from multiple angles.

“First, volatility in the stock market and declining multiples will inevitably play through to the private markets. Companies that haven’t ‘gotten the memo’ and are still recklessly buying growth and burning lots of cash doing so will increasingly be viewed as risky and will see that risk premium reflected in their value,” Flager continued in his note to executives across Silverton’s portfolio. “In some cases these businesses will not be able to attract additional investment at any price. Do not be one of them.”

He also suggested that if a startup in Silverton’s portfolio is in the middle of closing a round or in the latter stages of a fundraising process, “it may make sense to take additional capital.”

“More runway in this environment could mean the difference between life and death for your business,” Flager said.

In September 2019, we covered how Silverton had filed paperwork signaling its intent to raise not just one, but a pair of new venture capital funds. The firm was reportedly aiming to raise $120 million for its sixth fund, as well as for a $20 million “opportunity fund.”

In May 2018, we reported on the firm closing on its fifth fund, in which it raised $108 million in an oversubscribed round of funding.

Silverton has made 131 knownover its 14-year lifetime at least 42 of them – and had 28 known . Startups it has backed include insurance comparison marketplace , as well as and , a woman’s shaving products startup that was recently acquired by P&G.

Some of Silverton’s more recent investments include participating in Austin-based last-mile delivery startup $10.5 million and cybersecurity company $21 million Series B raise (which was led by , ’s venture arm).

Blog Roll Illustration:

The capital event was led by , the artist formerly known as Microsoft Ventures. , which led the firm’s Series A, also took part in the new round, along with CEIF.

Codefresh specializes in rapid and automated app deployment to Kubernetes. The firm’s release claims it can execute in “as little as 10 minutes.” Kubernetes is an open-source tool that helps manage containerized apps. Containerization is a growing development method that allows developers to “deploy and run distributed applications without launching an entire virtual machine,” .

An $8 million Series B is small, but I wanted to highlight this round for two quick reasons. First, to note that Microsoft’s bet on open source is ongoing. Or more simply, that the firm’s about-face from its historical  continues.

And, second, to remind ourselves what M12 actually is. Microsoft’s venture activity has a long and oddly tortured history. Let’s remind ourselves of some of the highlights: Back in the day, there was , which was . But not for long! Microsoft Ventures came back, sorta, when Microsoft , pushing it accelerator work under a new name so that its VC work could be called, you guessed it, Microsoft Ventures. But then later the firm decided that it was all a bit confusing, .

Got all that? The backstory isn’t too important other than to show that it took Microsoft a long time to figure out what it wanted to do in the venture space. I was told back in the more confusing days, for example, that the company didn’t want to get into VC as VC-level returns didn’t matter to a company as wealthy as Microsoft. So why bother!

Well, a bunch of reasons of course, but that’s immaterial. The Codefresh round is a reminder that Microsoft remains an active investor into at least tech that may help fuel its Azure cloud platform.