Crisis Mode – Founders vs. Corona
What happens typically amid crisis?
Often it depends on your position and role in the ecosystem – a crisis is considered as clear-cut opportunity from an investor’s point of view, but from a founder standpoint it may mean agony and pain. However, different sectors are different realities.
As a general rule sales, fundraising and scaling become much more difficult to achieve (capital becomes scarce). All these may translate from time to time in loneliness for the founder – people stop showing up while at the same time pressure is constantly mounting. Stay focused: observe, adapt and your expectations will return rejuvenated!
What do you need to consider during the crisis?
Crisis periods are your chance to show that you are a truly great founder. Important things to keep on mind:
- Resilience is the key
- Creativity wins scarcity
- Focus on your best resources, especially on your best people
- Survival is everything
Great founders are the ones that they are not only brave to face the challenge, but they also thrive under its pressure!
How do founders thrive during a crisis?
Mainly by possessing underlying assets which have been built beforehand. Such are:
- Strong team culture
- Strong and loyal hires
- Strong product platform
When the above conditions are in place then the crisis becomes an opportunity for founders to prove their business models by pushing sales in sensible ways. The way is paved for growth in revenue but also in staff – what follows after the clouds are gone is that survivors make the most value as competition has been reduced.
Is currently a good time to found a startup?
Regardless the fact that intuition may tell you differently, this is a great time to launch a startup:
- Great time for pre-seed investment (low cost risk)
- No need for revenues
- No need for lots of employees
The crisis is a great opportunity to develop your concept though, provided you observe the new reality and adapt your ideas accordingly.
What if you lose investors during Corona?
The most sensible or maybe the only way to proceed is to bootstrap your way through the situation. This is no time for arrogance: access your network and try to sale!
If you have invested considerable amount of money yourself look for support programs from public organizations with relatively little bureaucracy (e.g. soft loans, finance access with public guarantees). Fortunately, Austria has a lot more safety nets to provide comparatively to other countries where founding a startup is a swim or die situation e.g. USA.
What’s more, crowd funding is always an option and last but not least is a scheme where you trade equity for liquidity – don’t get intimidated by the idea because founders are in much stronger position than they think (without them the project will fall apart).
What kind of changes should be expected from the point of Venture Capital investments?
One thing is certain: there will be a lot of pressure as VCs are currently waiting and do not invest. For companies that were looking for investment rounds aggressively this means necessary change of strategy. Think about how to survive for the next twelve months by finding ways to fund yourself!
Where can someone find mentoring during the crisis?
To start with in your inner circle, so friends and family that care genuinely for you and your well-being. Of course, on the business side good advice and guidance can come from partners that believe in you and your concept e.g. business angels, professional mentors. In addition, nowadays there are many “unofficial” channels for business communication where you can connect with peers for feedback e.g. WhatsApp groups. The crisis stimulates communication and cooperation, since the same major problems concern the vast majority of founders and investors.
Is there anything good about the crisis?
Definitely: the tourists will depart. Startup enterprise is not about having fun so investors and founders that do not take it seriously enough, will get evicted by the ecosystem itself.
From a time management perspective, founders could/should get the chance to focus more on their core business since lots of distractions are put on hold – time freezes in a way and they can take advantage of it. Another advantage of the current “on hold” mode is that people have more time and they want to use it productively – they are more eager and available to support promising projects.
What will be the next day?
This crisis will probably be the biggest accelerator of digital change that we will ever see in our lifetime. The key point for success it to lay the ground in order to grow faster than the future demand. It is certain that whoever survives the storm will come out much stronger than before. On the other side, this crisis should not be all about the survival of the digital fittest – other sectors of the economy are equally important in our lives and this is a point we must not forget!
- Deep crisis –> will clean up the ecosystem from “tourists”
- Surviving needs also luck –> first and foremost you have to work your momentum hard
- Surprising but –> this is the right time to launch a startup
- Crisis –> the largest driver of digitization ever
- No one is unaffected –> common goal and room for collaboration
Now is the time to make things work. Stick to a plan designed to survive and with lots of work your dreams will come up stronger than ever before!