We asked venture capitalists to share one piece of advice for startups to help them weather the coronavirus and its effects on the health of their business.Many of them warned of a potential downturn that could make it harder for startups to raise new funding. They are telling portfolio companies to cut costs, shrink plans for growth, and maintain focus to conserve capital.
Navid Chadda, Mayfield — Have at least 2 years of capital reserves and don't get "too hung on valuation" if you need to raise again.Mayfield managing director Navin Chadda is advising his companies to prepare for rough waters, especially for startups that need to fundraise soon. As belt-tightening becomes more common among big tech companies and startups alike, those that depend on recurring revenue might have to revise financial projections to help better manage their investors' expectations.
"I would say the highest level advice is don't be optimistic, and don't assume this will pass quickly," Murphy told Business Insider. "The reality is, when these things happen, people are always slower to adjust and don't adjust enough." Jason Green, Emergence Capital — "Make an intentional trade of releasing some growth for burning less capital."Emergence Capital, which focuses on enterprise investments, has endured two other major downturns. Its survival has relied on those enterprise companies that can reduce their growth plans while still hitting revenue goals, said the firm's founding general partner Jason Green.
Beth Ferreira, FirstMark Capital — Re-work how you present information to the board on a video conference, "don't make it a readout."Beth Ferreira will attend a board meeting by video conference for the first time this week. She said the company didn't want to make its three board members on the other coast feel like they had to fly out.
William Hsu's advice to startups depends on the sector they're in. The managing partner of Mucker Capital, which is focused on software investments, is generally telling his portfolio companies to cut custs to reach profitability sooner.He predicts that the coronavirus outbreak will create new consumer demand for information about their health.
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