How to navigate your startup through uncertain times!

The last few weeks seem like a startup's worst nightmare - term sheets are being pulled, M&As are being stopped, entire industries are getting rattled (just look at the travel-tech industry). For the past years money was available in abundance and suddenly it might start drying out. No one knows the ultimate economic impact of the COVID-19 outbreak. However, it seems nearly everyone believes a global economic reset is upon us.

But, as always I believe there are a couple of ways to look at this. This crisis could turn out to be the greatest opportunity in your company's lifetime or at least lead you in the right direction. This is, if you show true leadership. Many great companies survived the economic downturn in 2001 and 2008.

So this is why I am writing this today. After founding three companies (one publicly traded on TASE), raising millions of dollars and experiencing two big recessions - I know what this feels like! I still remember receiving one term sheet form Lehman Brothers just a few weeks before they went bankrupt, as you can imagine this didn’t turn out as planned. I survived, succeeded, and lived to tell. 

The biggest take away for me is that CEOs that acted quickly and responsibly survived, the ones that hoped that it would go away didn’t. This post should help you to make quick and needed decisions to help you navigate through these stormy times.

Let's look back to see what we can learn to tackle this one. 

1. Hope is not a strategy - Create a real plan together with your co-founders and investors and look the truth straight in the eye. Things will get worse before they get better again. Formulate a plan to survive the next year and a half without outside funding. This strategy should guide you to make hard and needed decisions. Make sure that you, your co-founders and your employees see eye-to-eye on the vision you have and the measures that will be taken in the next weeks and months.
2. Be a role model - Everyone is looking at you for leadership, this is your time to shine and show strength. You need to be a calm leader. Don't panic!
3. Know your exposure - First step would be to identify areas of vulnerability, which of these can be mitigated early. Ideally, you have measures in place to diversify revenue or accelerate profitability and so make sure that your financials are in order. Have a solid financial model and run financial scenarios (e.g. make projections for the number of customers and think about what happens if your revenue drops to 75% or 50%?). This will further help you to know when to pull the trigger on major changes as things play out. 
4. Take responsibility for your employees - It’s your responsibility as a manager to keep your employees safe. By safe I mean two things, first comply with government regulations even if it's not easy and second make sure that you employees feel comfortable. You might want to put a board resolution in place that allocates a leader in case you or any other board member get sick or need to be quarantined.
5. Communicate with your board and investors - Make sure you are transparent during times of uncertainty and that you give them comfort. Do not make decisions without them, even if you can do so from a legal standpoint. Make them feel they are part of the process. If you do ask them to help the company and give you more funding, make sure you communicate it in advance and after you have all the facts, don't create unnecessary panic. 
6. Ask your mentors advice - I believe in the power of people working together and learning from each other. So go out and ask your mentors for advice, talk to your peers and so quickly validate your business decisions. If you are a Techstars alumni also reach out to your MDs, these smart people can help you get through this.
7. Extend your runway - You don't want to be in a position of needing to raise capital during an extended downturn and reduce future financing risk. You can avoid this by reducing your net-burn rate, or increasing free cash flow (or becoming cash generative). Plan to act and stay as lean as possible. It will help you to calculate different scenarios. Cutting salaries - cutting a % of all salaries vs. firing some people. There are pros and cons to each decision. The first allows employees to feel they are all in this together. If you do cut off people make sure it's in “one-go” so other employees don't fear being fired every day. 
8. Don’t give up on fundraising - You never know how investors react to situations like this. Strong companies will always be able to get more funding, and some investors might see this as an opportunity to get great deals , but higher valuations can be harder to come by, terms can become more taxing, and the size of a potential investment round can be limited - but they might still happen! Stay optimistic but realistic.
9. Try to stick to the long-term plan - Do not to lose focus of your long-term goals. You shouldn’t let external forces unnecessarily influence your path. I know, it can be tough, when conditions deteriorate but staying focused on long-term goals can help you with a frame of reference by which to measure short-term decisions. It will also help you with a plan for the recovery period.
10. Working remotely can be very tricky - It is important to stay in touch with all your employees to keep morale up. Daily or weekly calls are important. Be transparent about your plan and the decisions you make, no matter the size of your company.
11. Stay disciplined - This is a general advice not just for times of downturns. This means discipline with costs, forecasting, or hiring. Use this time to establish a culture of discipline for all conditions. Be helpful, smart, and prudent. With an established culture of discipline, you will be in a better position for any shock to the business and it will bring your team closer together.

These turbulent times make me very proud that I am working for Techstars. Now is when I see the true Techstars values shine. As a company we showed how adaptable we are and what we can do together, due to the fact we are spread globally and our network is so powerful . Our expertise and experience in operating events and programs in virtual environments for years, is remarkable and my fellow MDs and our investment team bundle all our vast experience to help navigate Techstars and our founders through this time.

Our priority is to help our founders and networks through this and we are constantly thinking about how to help our founders and adapting our programs to the circumstances we face, we are focused on maintaining the value and impact expected of Techstars. 

This is a challenging time - and when they talk about entrepreneurship being tough, this is what they mean (a true rollercoaster ride). But remember, it's also a time to grow, shine, and show your Techstars DNA. 

I often turn to my role model, Sheryl Sandberg, COO of Facebook, for advice. She once said:

“The easy days ahead of you will be easy. It is the hard days — the times that challenge you to your very core — that will determine who you are. You will be defined not just by what you achieve, but by how you survive.”