5 VCs discuss the future of SaaS and software after Pfizer’s vaccine breakthrough

Monday’s news that a COVID-19 vaccine candidate looks to be incredibly effective gave investors reasons to believe in a better future. Perhaps COVID-19 won’t be with us for years, investors appeared to think, but will instead become something that we can bend the curve on sooner than we thought.

A strong vaccine would be key toward moving back to life as it was. And for many companies battered by the pandemic, news that one was coming was more than a shot in the arm — it was stock market salvation. Airline shares soared. Cruise companies jumped. Even long-suffering Boeing shares took flight.

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But amidst the cheering, one sector of the stock market, a key comp for a host of startups, took hits. Yes, the high-flying SaaS and cloud stocks that have been such a key narrative in 2020 thanks to the pandemic and low interest rates, fell sharply while other sectors rallied off the vaccine tidings.

SaaS and cloud stocks are off more this morning, though their declines are shallower than Monday’s losses.

We asked yesterday what signal public investors were trying to send with their trades. But that’s just one angle of the picture. So, to better understand how private investors are viewing the same signals, I reached out to a few VCs who invest in SaaS and, in my experience, are worth listening to.

Below I’ve compiled notes from Bessemer’s Mary D’Onofrio, Work Life Ventures’ Brianne Kimmel, Day One Ventures’ Masha Drokova, Floodgate’s Iris Choi and Shasta’s Jacob Mullins on our question.

Are the bulls still bullish? Let’s find out.

SaaS, vaccines and the future of work

D’Onofrio wrote that her firm was still digesting the vaccine news and that it was “too early to say decisively whether or not people will be back to a pre-COVID life in the next few quarters.” That’s fair. Some good vaccine news does not mean that I’ll be back to speed-running United Economy Plus across the country every two weeks come April.

That said, D’Onofrio doesn’t appear too worried about the early-week selloff, noting that SaaS and cloud stocks — as measured via her firm’s cloud index — are still far ahead of other, broader indices this year. Why does that matter? “Stocks are forward-looking,” she said, which tells her “that even with more visibility into returning to ‘normal,’ the market anticipates that cloud companies will still be able to capitalize on the [market expansion] and growth opportunities that COVID helped to propel.”

“The pie,” she concluded, “has expanded.” That’s bullish and fair, I reckon.

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