The world is faced with an unprecedented crisis in the form of the Corona virus. We bring you comprehensive suggestions on fund raising during COVID-19 from our mentor Suryanarayanan A.
Here are the key takeaways for startups:
- Now is the time to focus resource capability inwards. It will be key for your business to maintain cash flow. In a crisis like this cash is king and the best vaccine. Holding more cash during difficult times is the wisest thing to do
- If you can afford to, temporarily slow down or pause fundraising— and go ahead only if the idea is good and relevant to COVID-19 scenario
- A flat-round of funding that may extend a startups runway for another 12 months should be considered a good option. Refrain considering banks for funding at the moment; it will slow down the process more. Focus on private funding only
- Find sources of cash to stay alive, including potentially doing some short-term deals that help the immediate crunch
- Clear communication and transparency with employees and external stakeholders is an absolute must. Startups should consider holding weekly meetings to discuss cash burn and runway with the core team
- A startup should burn less in such a challenging environment. Save more cash to survive for the next one year. Negotiate a payroll with your employees that works best for both the parties. You may also consider sharing your resources with other startups
- Postponed the launch of your product if it’s not relevant to COVID-19 scenario. If your product is B2C, launch in the small community like your own residential complex. Use more Social Media for marketing rather than spending on ads and other promotion methods
- The companies that have services and products relevant to COVID-19 scenario should work on long term strategies. An investor will rather focus on a startup that can maintain its cash flow instead of a company that would require high marketing costs in such a crisis situation
- To maintain cash flow, consider offering a marginal discount for the realization of your pending payments. Negotiation is key in this scenario
Suryanarayanan A emphasized on survival. If you don’t survive, there is no upside. So, working on the strategies for survival is more important than focusing on increasing your sales. If your company is alive and flexible, there will be great opportunities.