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Covid-19: VCs Will Love Startups That Dig Deep For Opportunities

The investment industry began realizing that growth at any cost is a failing model.

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What is the one thing that forms the building block of a new idea? An anomaly – either in a society or an organization. An entrepreneur latches on to the anomaly, comes up with a model to disrupt it, and then channels all his energy to execute the model. Covid-19 crisis is ‘fixable’ chaos that will usher in an era of the new normal in the way we act, interact and counteract. The new normal will result in several anomalies – more fodder for a motivated founder.

That said, 2020 will be tough going for investors and startups alike. If you are a startup or a founder on the cusp of launch, you may want to keep certain things in perspective,

Plan to dig in for long term. Businesses should be built to last. The race to unicorn status is quickly losing vehemence. Prepare your services so that they attract and maintain sticky customers. In these tough times, it should be easier to build relationships (loyalty) than to grow at unrealistic pace at forbidding cost. Think about how you can do better with communicating, after sales service, and give personal touches wherever possible.

Bring about operational efficiencies. Is your organization structure bloated? Are you in a swanky office that does not get client visits (most B2C businesses)? Can you get contractual staff for certain non- mission critical functions? Can you use shared services for bookkeeping, lead generation and customer support?

Even before Covid-19, the investment industry began realizing that growth at any cost is a failing model. Most VCs, for predictable reasons, force founders to grow at irrational rate. The pressure thus generated takes a toll on strategy and governance of the company. Even the poster boys in the VC world have toned down on their exuberance and chest thumping they became accustomed to, while driving exponential valuations.

If your cash flow requirements are light, you will feel less pressure.

Maintain team morale. Once you have made sure that your team formation is just right, make sure they feel relaxed. Keep them in the loop with the company’s business plan. They should clearly see the light at the end of the tunnel. Most members will react practically to any salary cuts, if they feel part of the plan. Furthermore, both customers and VCs will notice the positivity (or the lack of negativity).

Look for partnerships. Be aware that your competitors will be struggling too. If you have been in the industry long enough, you would know who they are. Reach out to the ones who may have a similar leadership culture. Explore if there is a possibility to collaborate. You may be surprised how intently you are be heard. Even if neither party has extra cash, there is always a share swap deal to be made. At Cianna Capital, we love founders who can hustle.

Keep VCs posted. Stay in touch with VCs. If you achieve any of the above, its worth tooting your horn a bit. Keep in mind that the VCs too are under performance pressure from their backers to. If you can convince them that you will that company which grows without guzzling cash and needing bailouts, they would love to eventually bring you onboard. Moreover, you will not need to accept any terms out of desperation.

Then, stay calm and focus on your business.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Covid 19 startup investment entrepreneur

Upmanyu Misra

Co-Founder, Cianna Capital

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