Corona; Expected Timelines

The UK govt has been unique in it’s response to Covid-19. We discuss why and try to extrapolate the implications, specifically as they pertain to the venture community

  • The response of almost all other countries: immediate lockdown, shutting off of the economy
  • UK: have accepted the virus cannot be contained and that the vast majority of the population (c. 60%) HAVE to get the virus. ‘Herd immunity’ is the only thing that will protect us. Therefore lockdown will only happen closer to the peak of the virus (predicted to be 10 weeks away in the UK!) in order to ‘flatten the curve’ (spread infections over time) and prevent NHS overburdening
  • If the health service is overburdened, mortality rate is 5%. If not, it’s 1%. The bottleneck being specialist equipment (ventilators specifically it seems)
  • Those countries that have gone into lockdown already, including china, will have a second wave of infections (probably later in the year) as they have not acquired herd immunity
  • The UK is simply trying to manage the ‘transmission rate’ and keep it within a golden zone. Too high and the health service is overburdened (Italy, Iran, Hubei), too low and you’ll get a spike later in the year (Rest of China, Norway … etc)
  • Implications: things in the UK will look a lot worse than most other countries that have gone into lockdown already in the short term. However, in the long run, the mortality rate should be lower and the government response will be vindicated. BUT, under public pressure they may buckle and implement lockdown sooner than is optimal
  • It means though that we are 5 months away from the UK returning to normal (peak is in c. 10 weeks according to the scientific advice and assuming it’s a normal distribution) + countries elsewhere in the world will have a second wave in the winter, forcing similar measures again. UNLESS, there is a vaccine (at least 6 months away, and longer for widespread distribution, at the very best?) or we get lucky and manage to repurpose existing medication
  • Markets have not priced this in yet, people don’t understand exponentials. It’s going to get orders of magnitude worse
  • Startups should prepare for a very harsh funding environment for the rest of the year as this ‘black swan event’ will trigger a global recession (repeated supply and demand shocks in every single country)

Venture Investor with Concentric