The unique coronavirus has been ravaging for many individuals, families and neighborhoods– and the consequences are still being computed. The tech world has actually seen wave after wave of layoffs, often numerous waves at one company just weeks apart. Some start-ups have actually lost almost all their income, and depending upon their money reserves, have little hope of recuperating.
For VCs, the last 2 months have been an exercise in triage.
Partners have actually gone through their entire financial investment portfolios to recognize the winners, what’s salvageable and what (at least in their minds) has no hope of resuscitation. If you remain in the first 2 groups, it’s back to whatever normal looks like in the midst of an international pandemic and a deep economic recession.
What if you all of a sudden get a call notifying you that your investor– perhaps your biggest champ to date– is going to cut the rope and compose you off entirely?
That’s what we are going to talk about today.
Before we go anywhere, be thankful if you even understand how your investors are evaluating your start-up. A lot of, sadly, will couch the terms they use (“we will be engaging less” or possibly “we are not likely to do our professional rata going forward”) rather than just saying directly, “we are writing you off; don’t call us– we’ll call you.” That’s respectful and face-saving for all celebrations, but the absence of openness can make choices down the road much harder. It’s much better to know where you stand, even if the news is hard.
Finding your bearings
The primary step to approaching this situation is to get your bearings. Just like throughout a fundraise procedure, it’s not uncommon for various financiers on your cap table to reach different conclusions about your startup’s potential. One financier might compose you off, while another has you marked at a more neutral valuation and even positively. This can absolutely be frustrating, and offered the emotion of this circumstance, it can be hard to logically accept that a financier who when believed in you no longer does so.
Article curated by RJ Shara from Source. RJ Shara is a Bay Area Radio Host (Radio Jockey) who talks about the startup ecosystem – entrepreneurs, investments, policies and more on her show The Silicon Dreams. The show streams on Radio Zindagi 1170AM on Mondays from 3.30 PM to 4 PM.