The past few months have seen almost all businesses make dramatic shifts, and the same is true for venture investing. By April 1, I knew I’d been fooled. I had figured COVID-19 would be just a bump in the road for our portfolio companies across Southeast Asia. Lockdowns and other measures were disrupting life in countries from Malaysia to Vietnam, but the founders and CEOs of our firms expected things would bounce back to normal soon. And so did I, until the bad news and grim projections from overseas kept coming. The data points were adding up to a pattern which in no way looked like a V-shaped, or even U-shaped, global economic recovery.

To me, they formed an L—a projected recovery with a long, flat bottom. So my partners and I convened a meeting with all members of our VC staff. Crunching through data on our dozens of companies, we redid each one’s prognosis, keeping in mind our certainty that the globe’s recovery would look more like an L, not a V. Next, we triaged the companies, using the color codes that emergency room teams assign to patients: red for critical and needing urgent care, amber for stable but serious, and green for no immediate danger.

Our mission was to better understand what the next 18 months would look like for Asian economies and then to triage the portfolio, bringing all companies to the best possible state of health for survival. Our April chart showed as many as 46% of companies flashing red and 31% in the amber range.

We started by adopting what we call a wartime mentality: recognizing that what’s going on could be deadly to a startup, and subsequently our VC firm. We then made and implemented plans that were data-driven but people-inspired throughout the portfolio.

Driving with the data lights on

Being data-driven doesn’t mean simply letting the numbers tell you what to do. It means gathering as much information as you can that could affect your goals, whether the info is quantitative or qualitative, and putting it into forms you can access and use. From the start, it was obvious the pandemic would impact different tech sectors differently. But we couldn’t just judge our companies by generalities like “online groceries good, travel booking bad.” Venture investing is a long game. We had companies in hard-hit verticals that looked solidly set to survive—one had over four years of cash runway—and others that looked dead in the water, unless you could find lifelines.

We looked at multiple factors to triage the companies. Will they have the cash to last at least 18 months? How good is the management team at making both tough decisions and creative leaps? And most importantly, what’s the outlook for their industry? (For one set of clues, we started tracking similar markets in China, which had entered a COVID curve earlier.)

Sometimes we had to persuade the founders—and their board members—to think in terms of surviving a war. Using data helped. We showed them articles by leading world economists, citing the global forecasts that had spurred us into action, and shared our concerns that led us to tag them red. We talked them down from bad ideas (“no, this isn’t the time to raise another round of funding”) and asked them to devise plans matching the grim realities.

One red company watched COVID-19 squash its two main channels of online revenue when people stopped buying big-ticket goods. But the company figured out a plan that moved them to green. It included staff cuts, salary cuts ranging from 12% to 30%, securing (but not yet tapping) a line of credit, and refocusing traffic on a specific product offering where people were snapping up small but needed services. The latter was a strategic shift for the company. This greatly extended their runway from nine months to 24 months.

After working closely with our portfolio to find creative ways to survive the pandemic, many companies have since moved a full notch or two on our triage scale. The latest profile from June 2020 shows only single digits in the red, with as many as 70% to 85% of our portfolio companies cruising in green.

Rethinking the portfolio pyramid

Meanwhile, we rethought our own strategies. Just as venture-backed firms must change their ways in abnormal times, so must the VC.

VCs typically build and manage a portfolio as follows. Once you’ve pooled your limited partners to start a fund, you will invest in about 20 companies. You’re counting on maybe two of those to hit it out of the ballpark; those two alone should return the entire fund. Below them, you’d expect a pyramid: a couple more companies with nice but lesser returns and half that will either break even or fail. COVID has flattened that pyramid thinking. If just one of your top two is severely jeopardized, it means deep trouble. So we’re playing the game in a new way.

As a VC, you don’t normally sell good companies early, because you forfeit the long-term upside potential. But now we’re going through the sales process with a few, where the CEO is on board. The companies are strong, some are profitable, and though we’ll miss the chance that one might turn into a home run, we believe it’s best to bank the returns now as a safety net for the fund. Instead of swinging for the fences, we’re going for more doubles or triples: maybe a 3X return now instead of hoping for 50X later.

Globally, economies are still on a downward path with uncertainty ahead. While we still have a wartime mentality, we’ve shifted gears from protecting our positions to that of an offense strategy. We realize a few companies will not survive the storm and we cannot prevent that. We’re now focusing our time on yellows and greens. It’s time for stronger companies to play offense by recruiting seasoned talent, expanding product offerings, increasing marketing budgets, and acquiring competitors.

Vinnie Lauria is a former Silicon Valley entrepreneur turned investor. He is a managing partner at Golden Gate Ventures, a Singapore-based VC fund.