How this Dreamit VC thinks about successful startups during a pandemic

Successful startups are ones that have a strong understanding and game plan for the problem they’ve set out to solve — whether we’re in the middle of a pandemic or not, according to Dreamit Ventures Managing Partner Darren Sandberg.

It’s what he calls “the 4 a.m. problem” — the problem that customers lay awake in the middle of the night thinking about solving.

While circumstances are challenging for startups right now that may be trying to pivot their business model to a coronavirus-related solution or struggling to fundraise, VCs will still be looking for the same three factors when deciding whether to invest in a company, Sandberg told Technical.ly.

“We’re looking for strong business models, solving big problems and good teams,” he said.

Dreamit, which has portfolios of startups across three verticals — healthtech, cybersecurity and urbantech — usually invests in companies in their pre-Series A rounds of fundraising. The fund’s accelerator consists of introducing founders to customers and investors, facilitating relationships with industry leaders, and business coaching.

Darren Sandberg. (Photo via LinkedIn)

Sandberg said because companies from across the world participate in the accelerator programs, Dreamit was already doing much of the programming in a virtual setting. The last few months have been proof the program can continue to operate and thrive in this way, he said.

While what makes a successful startup may not change during a pandemic, growing a company right now can look pretty challenging.

“It most certainly will affect the way everyone does business,” Sandberg said.

Leaders of startups that are looking to raise a short bridge round of funding right now are likely the folks that are having trouble, Sandberg said, while companies that have just completed a larger Series A round probably have the next year and a half under control.

And while fundraising right now could be trickier, it hasn’t stopped altogether. Sandberg said a handful of larger deals the fund had started are still going through, and that the current pandemic actually produces plenty of opportunities for growth, especially in the healthtech and cybersecurity areas.

Sandberg called out one of Dreamit’s heathtech companies, TrekIt Health, which created a multi-clinician platform for collaboration on patient care: The startup is currently adapting its platform to be used outside of traditional hospital spaces and in pop-up care centers being set up in different cities for COVID-19 patients.

But it’s not just healthcare that can make pandemic-specific adaptions: One of the fund’s urbantech companies, SmartBarrel, which makes a tech solution for construction workers to clock in and out, is adding a contactless feature.

Companies that address problems in innovative ways will be the ones to ultimately fund success, Sandberg said.

“A lot of companies are changing rapidly to address COVID, and some of these solutions are very, very real,” he said. “We’re going to look for companies that can survive and thrive.”