Eric Manlunas Talks Venture Capital During Pandemic

All of the portfolio companies under Wavemaker Partners and Wavemaker Three Sixty Health, a healthcare venture capital fund headquartered in Pasadena, have been impacted in different ways by the COVID-19 pandemic, Wavemaker founder Eric Manlunas said Monday. 

About half a dozen companies have been impacted positively, Manlunas said, and have “turned the headwind into a tailwind.”

Manlunas spoke about the performance of Wavemaker Partners in an interview published Monday in the Los Angeles Business Journal. 

“One of our companies is up 13 times year over year in the same period,” he said. “Some are up double, some are up 80 percent. What those companies are doing appealed to that shift in behavior with people being locked in at home.” 

Among the other half of their portfolios, Manlunas said austerity measures implemented when the pandemic hit has led to layoffs, with some companies focused on “living to fight another day.”

“Survival has become the priority rather than growth. In startups, it’s normally about growth, growth, growth at all costs. That’s all gone out the window,” Manlunas said in the interview.

Manlunas said he believes most of the portfolio companies will recover from the negative effects of the pandemic, although in what shape or form remains to be seen. 

“The scrappier ones will be the ones that make it,” Manlunas told the LA Business Journal. “It’s not the smartest or the strongest, but the most adaptable ones that will survive.”

On how the pandemic could impact venture capital investing, Manlunas said funding will definitely slow down since the calculus of spending has changed. People, he said, would be asking whether it would be wise to make new investments or to follow on with existing companies. 

“Fundraising is going to slow down, and new investment will follow,” he said. “From our perspective, we are leaning toward being conservative – I realize that early stage conservative sounds like a bit of an oxymoron. We are going to continue to make new investments, but fewer of them. We have a few in the pipeline we are going forward with.” 

Manlunas’ Wavemaker Partners is an early-stage venture capital firm founded in 2003 and dual-headquartered in Los Angeles and Singapore. The company has over $380 million in assets under management, has invested in over 350 portfolio companies, including some in Pasadena, and has consistently delivered top quartile returns to investors, according to a company profile. 

Wavemaker Three-Sixty Health, LP, is a joint venture between Wavemaker Partners and another Southern California firm, Three-Sixty Advisory Group, LLC, a healthcare consultancy and early-stage healthcare accelerator founded in 2007. 

The joint venture is supported by the Draper Venture Network, the world’s largest venture collective with 23 funds across four continents.