The COVID-19 Startup Survival Guide Part 1

The next few weeks are going to be critical for our startup community and how swiftly and decisively founders act will determine the odds of their ventures being alive 12 months from now. Cash is King and the less you spend now the more likely you are to be around later. With this sense of urgency front of mind, as well as looking beyond Enterprise Lab, we asked Imperial Venture Mentoring Service (IVMS) mentors and Enterprise Lab Experts-in-Residence (over 80 of the most successful, experienced people we know) for their advice on what founders need to do to survive in times of unprecedented change. There is too much to cover in one article, so consider this just the beginning of what they told us...  

‘Cut fast, cut hard, be ruthless.’ 

‘Cash is King’ echoes through my inbox from Imperial Venture Mentoring Service (IVMS) mentors and Enterprise Lab Experts-in-Residence. Paul Atherton, Director IVMS and serial entrepreneur bluntly puts it, ‘Cut fast, cut hard, be ruthless.’  

Paul has been through at least five existential economic crises during his entrepreneurial career, and he has been telling the businesses he is involved with to create plans that assume the world won’t be back to business as normal for at least a year and that there won’t be any more equity funding during that time. 

‘Be opportunistic, if you can help with Covid-19, pivot now!’ 

Can you repurpose your product or service to help with the current crisis? Or is your company capable of pivoting to a product or service that can help? You don’t have to be as big Airbus and Dyson, or Tesla to produce ventilators. If you are logistics company, maybe you can keep our brave NHS workers supplied.  

Pycno have moved all the suppliers that were making their IOT device to making surgical masks and N95 masks and they are using the profits from the sale of these masks to donate masks to charities that can't afford them. 

Y Combinator have so many companies helping with Covid-19 they had to create a list.  

Look for who is looking for help. Konfer have put together a short article about what help the UK government is looking for, listing the three dedicated emails that have been set up by the government who are still looking for help with vaccines, ventilators and offers of innovation and tech - there is also a list of organisations looking for help.  

'Talk to your Team, your survival depends on it’ 

Don’t try to hide any hard truths from your team. They want your business to survive and they took a job in a startup knowing the risks. They will be able to see opportunities you cannot, so let them see the financials, make suggestions and, if necessary, let everyone share the pain. IVMS Mentor Victor Dillard advises, 'first and foremost make sure your staff are safe, keep them engaged, driven and ensure they are supported.'

Ensure they understand the goal: a survival framework that gets you to end March 2021 without any further investment.  

Dan Eastmond, who has a cracking Medium blog here, has a brilliant section about how to get the best out of your team during tough times in his book How To Survive When Your Business Is F****d. Grab a copy, it has heaps of highly digestible advice and links to top resources.  

And whilst there isn’t much help coming from the UK government right now, the furloughed workers scheme could be helpful in lessening some of your paint points.  

‘Don't take bad money’ 

It is unlikely that many VC funding rounds will be taking place while the pandemic continues.  VCs will likely be focusing on their existing portfolios to help keep them alive, rather than taking risks with new investments. That said, a number of rounds are currently closing and there are signs of some deeply shady behaviour out there. Matt Clifford, co-founder of Entrepreneur First, has posted a terrific article on this. Reputations are going to be made and broken during this time and you need to be strong in your resolve. 

Remember that your startup is a marathon not a sprint, when it comes to expanding post Covid-19, and hopefully exiting in the future, the decisions you make now are going to have a massive impact. As a founder, you are the most important asset your startup has. But your startup isn’t the most important asset you have. You are capable of many ventures, don’t take bad money and trap yourself. The opportunity cost is too high.  

‘Get negotiating!’ 

Every contract you have is negotiable. This applies to your business finances, your personal finances and your team’s personal finances. You will find there is plenty of room to manoeuvre and whoever you owe money to (rent, rates, tax etc.) will understand that an alive startup can carry on paying them... a dead one not so much! Can you make a burn rate that would currently cover a week last a month? 

For those of you worried about force majeure in your service contracts, check out A Force to be reckoned with – a brief guide to Covid-19 and force majeure by BDB Pitmans, Legal Experts-in-Residence.  

'Use remote technologies NOW'

IVMS mentor David Samuel recommends to 'continue as normally as possible, use normal working hours, get into normal clothes and use remote technologies NOW. There are plenty out there, Google hangouts, MS Teams, Cisco Webex, Zoom and many other conference systems like hopin and Runtheworld.'

‘Check out the grant landscape' 

Check out the grant landscape, there are lots of new grants and funding sources are opening up to tackle Covid-19. Pioneers Post have put together a helpful list of Social enterprises and COVID-19: Grants, loans and other funding. And more funds and initiatives are being announced all the time. Imperial launched a Covid-19 Response Fund on 25 March, following a groundswell of offers from alumni and friends to help speed up the College’s work to tackle the global pandemic.

Even if you can’t help with Covid-19, there are still a significant number of grants out there. Think about all the key terms that apply to your product or service and use that in your search browser. What about listing or linking to new government business grants/support here too. 

‘See the opportunity’ 

Hard as it may be to see, or appreciate right now, the challenge you now face is going to make you a better leader. Paul Atherton says it well, ‘This is where you really learn how to be an entrepreneur and how to really run a business.’ IVMS mentor Dharmesh Malam advises, ‘Become wartime CEOs…. the best, most sustainable companies will survive.’ When we have moved beyond Covid-19, if your venture is still alive you will be running a vastly superior business.  

What's next?  

At Imperial Enterprise Lab, our mission is to make sure as many startups as possible weather the current crisis and create stronger, more resilient businesses.  

We will be posting more insights and advice from Imperial’s IVMS mentors and Experts-in-Residence over the coming weeks so watch this space, we'll be back. ?? 

UPDATE: We promised you more and you can now read parts 2, 3 and 4 at the links below.

• The COVID-19 Startup Survival Guide Part 2: Customer Discovery During Lockdown
• The COVID-19 Survival Guide Part 3: Negotiating Virtually for Success
• The COVID-19 Startup Survival Guide Part 4 – Communication is key