A Note From The Team At WNT
19 March 2020
Dear Startup Founders and CEO's
Most of you are across the current environment and may be considering the impact on your businesses. We at WNT Ventures have seen these scenarios play out before, usually with different characteristics of how they begin; but how they play out has similarities.
We’ve reached out to our wider network and gathered our collective knowledge to give you some guidance over the coming months.
While we don’t know how long the uncertainty may last, we can reasonably expect that the balance of 2020 will remain challenging. Each company will experience these challenges differently in this environment and only you can understand fully how and when it might impact your business. While you may not be feeling an immediate impact, we recommend you set some time aside for scenario planning to get ahead of things before they occur.
Areas where you may expect, or may already be experiencing challenges, include:
Ability to raise capital
- Expect a delay from investor decisions as a willingness to make investments will be low until the level of uncertainty is removed.
Supply chain disruptions
- Disruption will continue particularly for hardware companies, but software companies aren’t immune and could suffer delays alongside the rest of the market.
Customer or partner decisions delays
- For the same rationale as investors, you may experience a hesitation from previously warm customers to commit to buying product or committing to a long-term relationship, especially if it requires face to face meetings to convert.
Some areas where we think you might put some thought:
Manage your cashflow
- An obvious one but important. Can you find ways to extend your runway? Cut back on discretionary spending for a time, at least until you can see some uncertainty coming out of the markets.
- Ensure your marketing spend is appropriate and focussed on providing you with a better than usual ROI.
- Examine your capital spending plans and determine if they are necessary or can be deferred. This goes equally for additional R&D.
Look after your people and consider your hiring policy
- You’ve put a lot of time and cost into building your workforce, don’t give that up easily. You will need them when things improve.
- Can you deploy your people on improving your product in time for a (potentially delayed) launch?
- Likewise, consider your current hiring policy – is that next hire truly critical or can it be deferred – you can look but you don’t have to hire.
Keep up momentum
- While looking to extend your runway, make sure you maintain momentum - trying to get going again from a standing start once things start moving again is a much harder prospect.
- Stay focused on value inflection milestones. Busywork will eat up cash reserves without adding value to your business.
Look for opportunities
- A crisis is also an opportunity, keep an eye on the risks, but look out for the chance to strengthening partnerships, or take a leadership role in this environment. They may pay off in the long run.
Raising Capital
- Funds that have money still need to deploy, however, they will be inundated with panicked companies - encouraging more investor friendly terms.
- Raising capital for at least the next two quarters will be challenging so think through your alternatives so you don’t become desperate; Talk to your existing investors for a bridge round; Are there grants you can apply for?
Be effective in your communication
- There is enough uncertainty around, don’t let your business add to the problem. Be upfront and timely with your decisions.
- Review and re-set expectations for progress of the business in light of the environment. Be clear about what you expect the impact to be and communicate it to your stakeholders clearly and often.
Don’t Panic and Stay Healthy
- This situation is not here to stay and is not all encompassing. Take time to realise the world will carry on. Take time to stop occasionally and look after your own and your team’s health, both mental and physical, along the way.
- Connect with others, talk with people you trust about your concerns and worries.
- Help out where you can, there will be people struggling and a sounding board may be all they need to get them through.