Covid-19 has forever changed the state of work. Perhaps the most profound change relates to office layouts. There’s no denying that the workplace will look different after the pandemic than it did before. And there’s been a lot of speculation about what thephysical office will look like in a post-pandemic world. In the past few weeks, we’ve gained a little more clarity on what to expect. Here’s … ... read more
Top VCs Share Their Recommendations for Startups Amid Pandemic
The Covid-19 outbreak has taken a heavy toll on the public markets, with markets fluctuating widely in recent weeks. But the pandemic has also had a profound impact on private markets. According to CB Insights, private market funding in the first quarter of 2020 was on pace to reach $77B, down more than 16% compared to the fourth quarter of 2019 and down nearly 12% versus the first quarter of 2019.
The projected decline in the first quarter of 2020 would represent the second steepest quarterly decline in the past ten years, second only to a 36% decline in the third quarter of 2012. The drop-off was slated to be even more dramatic in Asia, where private market funding was expected to fall 35% from the first quarter of 2020, compared to the fourth quarter of 2019.
Venture capitalists are offering a wealth of advice to their portfolio companies related to how to cope during the outbreak. As Inka Mero, Founder & Managing Partner at Finland-based Voima Ventures, which is “the first true deep tech VC in the Nordics” has said,
Many of today’s unicorns have been founded or built during recessions or downturns – resource scarcity can be a source of creativity and pivoting.
Here are three tips from investors to startups navigating these turmoil times.
1. Prioritize employee morale and mental health.
The current environment is immensely stressful. Not only is there increased fear and anxiety about succumbing to or transmitting the disease, but there is also increased stress and loneliness pertaining to isolation.
Many admirable venture capitalists are reminding their portfolio companies to prioritize employee mental health and morals during these times. Jan Sasse, CEO at Tesi—a Finland-basd venture capital and private equity company with more than 700 portfolio companies—is one such venture capitalists. She has explained,
Companies will face tough times but most importantly the management teams should demonstrate strong leadership, maintain employee morale and strategic clarity, bearing in mind that often the best companies are created during economic crises.
Entrepreneurship is stressful in the best of times. Research has found that entrepreneurs are 10X more likely to suffer from bipolar disorder and 2X more likely to suffer from depression. Mental health needs to take a front seat in the wake of Covid-19. Revenue boosting and growth efforts to weather the storm are likely to prove ineffective unless employees are in the proper headspace.
2. Embrace change
In early March, Sequoia issued a letter to its founders and community. The first sentence of the letter read, “Coronavirus is the black swan of 2020.” The letter went on to offer advice to founders grappling with how to respond to Covid-19. Sequoia urged founders to embrace change and adaptation
Having weathered every business downturn for nearly fifty years, we’ve learned an important lesson — nobody ever regrets making fast and decisive adjustments to changing circumstances. In downturns, revenue and cash levels always fall faster than expenses. In some ways, business mirrors biology. As Darwin surmised, those who survive “are not the strongest or the most intelligent, but the most adaptable to change.
Sequoia highlighted that adaptation and decisiveness go hand in hand with leadership.
A distinctive feature of enduring companies is the way their leaders react to moments like these. Your employees are all aware of Covid-19 and are wondering how you will react and what it means for them. False optimism can easily lead you astray and prevent you from making contingency plans or taking bold action. Avoid this trap by being clinically realistic and acting decisively as circumstances change. Demonstrate the leadership your team needs during this stressful time.
Entrepreneurship is characterized by widespread change. But entrepreneurship amid a pandemic involves unprecedented change. The entrepreneurs that will personally and professionally endure the storm will be those who can embrace change and decisively take action even when surrounded by uncertainty
Many startups are grappling with how to continue to navigate their workforces’ transitions to remote work. When companies begin to engage in remote work, they can succumb to an “out of sight, out of mind” reality. It’s critical that startup leaders prioritize overcommunication even when their workers are no longer physically located in the same space.
Inka Mero reminds her portfolio companies to overcommunicate in this time. She explains:
Firstly, take care of your team, talk to your people, board and investors – rather over-communicate than under-communicate. This is also a great time and an important time to pick up the phone and call your existing customers! When times get rough, new business will go down and the existing relationships matter. It is important to see how you can get together with your customers and ensure business continuity. Finally, many of today’s unicorns have been founded or built during recessions or downturns – resource scarcity can be a source of creativity and pivoting.
Affinity can be a great platform to ensure that you communicate during times like these. It can help you gauge the strength of your relationship to enable you to proactively determine when you need to overcommunicate. Affinity also uses AI, Machine Learning, and Natural Language Processing to identify with more than 95% precision whether an email thread needs a response or a follow-up message. Ultimately, you’ll be able to prioritize communication—and overcommunication—with peace of mind and minimal effort.