April 24, 2020
Original image by Brian Jelonek
Good morning, and welcome to Protocol Index, your daily pop-up report about the financial movements that matter to tech during the COVID-19 crisis. Want Index in your inbox each morning? Subscribe here.
Today: There's a surprising amount of optimism among some entrepreneurs, a whole new batch of loan problems, and some investors hate virtual meetings.
As of 4:25 a.m. PDT: Nasdaq Futures: 0.60% | Euro 600: -0.23% | Nikkei: -0.86% | Hang Seng: -0.61%
It's Friday, so I thought I'd keep things light by sharing some of the positive feelings I've heard from startups and investors over the past week or so.
It's not all sunshine and rainbows, obviously. The caution that was already creeping into the startup scene after WeWork's implosion has accelerated: Everyone is now acutely aware of how much cash they've got, and how much they're spending.
All in all though, there's cautious excitement among many entrepreneurs.
Startups faced an uphill battle getting PPP loans, thanks to initial confusion about whether VC-backed companies were allowed to apply. (They were.) And now a whole new set of challenges is set to appear, thanks to the Fed's Main Street Lending Program.
Protocol's Emily Birnbaum and Biz Carson reported Thursday on a key element of the program: It requires businesses to be EBITDA-positive. That makes a lot of startups ineligible.
There's a reason for the requirement, of course: The Fed needs "to do what's in the public's interest, and that's not to fund companies that are going to go out of business," Rotem said.
Lawmakers are pushing for changes. A group wrote to the Fed on Thursday to ask it to adjust the guidelines before the program officially launches.
Shareholder meetings normally offer investors a chance to grill company executives. But now that the meetings are virtual, that's getting trickier. Reuters reports that many banks have moved to taking questions submitted in advance, preventing investors from engaging in a back-and-forth conversation with management. That's unsurprisingly annoying people: One activist told Reuters that he's now thinking about going to executives' neighbourhoods to confront them there, instead.