Timing - the most crucial aspects for CEOs’ should mind.

Timing - the most crucial aspects for CEOs’ should mind.

March 30, 2020
March 30, 2020

Lately quite a few articles were published around how Israeli VCs got impacted and the consequent effect on the founder’s ability to raise capital. For example @gil dibner published a remarkably honest article about the current meaning of being “open for business”. Link

For early and seed stage startups (for which raising funds in Israel was a challenge prior to the Corona pandemic) I would suggest not to hold any expectations towards completing a successful round by end of Q3. The relevant Israeli funds are unlikely to invest and the global funds will not invest in companies that are not based in the same geography. In other words try not allocate any bandwidth towards the full-time job of raising funds.

For later stage startups the chances are better while the terms may be less than appealing – check out @Yuval Ariav post based on a survey he performed.Link

So what do we need to do?

A good read around suggested courses of action can be found in NFX’s blog “28 Moves to Survive (& Thrive) in a Downturn” Link

More than 30% of the founding members I spoke with already crunched their own salaries in order to prolong the runway, A noble move, but how long can they endure the crunch?

The most crucial aspect that affects the CEO’s decision making should be based on timing, how long do we need to endure the hibernation? Which Courses of actions should we take respectively? (e.g. how deep should we cut to enable survival across that period of time).

JP Morgan released a forecast indicating at least two quarters of a deep recession followed by the beginning of the recovery “US GDP will bounce back to 6% in the second half of the year”, we have six month we need to endure on our own devices, with low probability of new income and strong upside to those who will prevail. Link

So if you are still in the game, don’t hesitate, you are required to make tough decisions, don’t cut corners, and use your remaining capacity on strengthening your internal core cadences, focus on the existing install base and be attentive to the mega trends as timing is everything.

Lately quite a few articles were published around how Israeli VCs got impacted and the consequent effect on the founder’s ability to raise capital. For example @gil dibner published a remarkably honest article about the current meaning of being “open for business”. Link

For early and seed stage startups (for which raising funds in Israel was a challenge prior to the Corona pandemic) I would suggest not to hold any expectations towards completing a successful round by end of Q3. The relevant Israeli funds are unlikely to invest and the global funds will not invest in companies that are not based in the same geography. In other words try not allocate any bandwidth towards the full-time job of raising funds.

For later stage startups the chances are better while the terms may be less than appealing – check out @Yuval Ariav post based on a survey he performed.Link

So what do we need to do?

A good read around suggested courses of action can be found in NFX’s blog “28 Moves to Survive (& Thrive) in a Downturn” Link

More than 30% of the founding members I spoke with already crunched their own salaries in order to prolong the runway, A noble move, but how long can they endure the crunch?

The most crucial aspect that affects the CEO’s decision making should be based on timing, how long do we need to endure the hibernation? Which Courses of actions should we take respectively? (e.g. how deep should we cut to enable survival across that period of time).

JP Morgan released a forecast indicating at least two quarters of a deep recession followed by the beginning of the recovery “US GDP will bounce back to 6% in the second half of the year”, we have six month we need to endure on our own devices, with low probability of new income and strong upside to those who will prevail. Link

So if you are still in the game, don’t hesitate, you are required to make tough decisions, don’t cut corners, and use your remaining capacity on strengthening your internal core cadences, focus on the existing install base and be attentive to the mega trends as timing is everything.

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