(Yicai Global) March 6 -- The coronavirus is the black swan event of 2020, according to a note Sequoia Capital sent to company founders and chief executives today, and in which the Silicon Valley-based investment firm also warned enterprises to be well prepared for the doomsday scenarios that may play out in consequence.

Many companies in frontline Covid-19 outbreak countries have confronted challenges as a result of the virus outbreak, Sequoia said in the communication. Many firms have banned all non-essential travel to avoid possible infection of employees. Tech firms, including Google, Facebook and Nvidia, are holding meetings online instead of staging their grand annual offline conferences.

Some companies have seen their growth rates slide between December and last month. Several that were on track before are now at risk of falling short of their first-quarter plans as the coronavirus casts its net ever wider.

"The unprecedented lockdown in China is directly impacting global supply chains. Hardware, direct-to-consumer, and retailing companies may need to find alternative suppliers. Pure software companies are less exposed to supply chain disruptions, but remain at risk due to cascading economic effects," the circular also noted.

Containment of the epidemic will perhaps require several quarters, the firm advised. The global recovery may take longer still. "While The Fed and other central banks can cut interest rates, monetary policy may prove a blunt tool in alleviating the economic ramifications of a global health crisis."

Weathering Storms

Sequoia also encouraged companies to turn a challenging situation into an opportunity to set themselves up for enduring success. They cited emblematic examples like Google and Paypal, which survived the dot-com bust, and Airbnb, Square and Stripe, both born amid the global financial crisis.

Some Chinese medical-tech firms in which Sequoia China has invested, including hospital registration service provider Guahao.Com, online medical treatment firm Xingren.Com and online medicare learning platform 91huayi.Com, have joined the battle against the pestilence.

"The epidemic has made people see the key role online communication plays between doctors and patients, bringing opportunity for firms in online diagnosis and treatment," said Zhai Jia, managing director of Sequoia China.

Formed in 1972, Sequoia Capital has successfully invested in GitHub, Google, Linkedin, Nvidia, Oracle, Square, YouTube and Zoom.

A black swan is an unforeseeable event beyond that normally expected in a given situation and which has potentially grave repercussions. Black swans feature extreme rarity, severe impact, and the subsequent view of the universal failure to predict them as pure folly. The unexpected success of the UK's referendum to leave the EU and Donald Trump's victory in the 2016 US presidential election are oft-cited examples of such occurrences.  

Editor: Ben Armour