Having been in the VC business for 22 years now, we have had the misfortune of living through at least two major downturns. While each has its own unique characteristics, there are a few lessons that may be relevant in responding to the latest crisis.
Let me first note that every company faces a different situation and what’s right for yours could depend on stage, funding history, cash balance and, perhaps most notably space.
Some companies make be seeing a serious uptake in business activity as a result of coronavirus (ie Zoom). For those lucky few, congratulations. You can stop reading now…this post is not for you.
For the rest of us, let’s first acknowledge that we don’t really know how deep or how long this turndown will be. We wouldn’t be in the startup business (as Founders or Investors) if we weren’t naturally optimists, but now is a good time to consider downside scenarios — that is, it could be deep (ie customers stop/slow purchases dramatically) and it could be long (ie 18+ months before it returns to “normal”).
Given that backdrop, What to do falls into three buckets: