How to keep your startup afloat during a global pandemic — 4 essential steps
- Establish a work-from-home protocol with more frequent communications
Firstly, safety, safety and safety. Social distancing, working from home and cutting down meetings are the most effective measures to contain the spread of COVID-19. In Hong Kong, events and social activities are all cancelled — even with our friends. But it’s an important measure that can drastically help stop the spread of this virus.
Working remotely for long periods of time can be difficult for a lot of teams. Set regular calls to check in and encourage active communication, even for casual chats, as this will help everyone stay productive and know that they’re not alone. If it’s absolutely necessary for a member of your team to be on-site, consider rotating on-site time shifts and don’t forget to provide your team with enough disinfection supplies. This will not only reduce the spread of the virus, it helps your team members know that you care.
2. Don’t have a global plan? Now is the time to create one.
You need a global plan more than ever. There are time lags and different recovery phases across the world. The countries which were affected first, like China, Singapore, Japan, Korea have seen successful flattening of the curve and even recovery. Hong Kong as a gateway, is stable for now despite expecting a second wave of a COVID-19 outbreak given the influx of people coming back to Hong Kong from overseas. If a second outbreak occurs, no one can predict how long it will take to peak or and then recover.
With the recent global outbreak, everyone will ask what safeguards you have in place if the outbreak lasts for up to a year. What will hiring look like, what is your crisis funding strategy, and will your team be able to develop your business through it all. Being cognizant of these limiting factors will also help your startup think more broadly and be creative to move forward.
Here are three questions to help get you started:
- Are there any opportunities in light of the COVID-19 outbreak that might relate to your business?
- What are your milestones for the next time you raise funds (i.e. pilots, trials, testing)? How will your milestones be impacted?
- Are there any resources you can pull in from overseas? Any other source of revenue or funding if your local market is heavily affected?
3. Prepare for tight investment funding
The stock market has caused massive losses in banks and hedge funds in just two weeks. It will continue before we know what damage is done to our economy. VCs may have their commitment from limited partners locked down. But they will still be more cautious when investing, and worst case scenario for VCs is that partners might default on a capital call. If the fundraising environment is bad, capital market will shrink in the coming 1–2 years with a lot fewer new funds. Angels might also reallocate their portfolio if they’re suffering from loss.
Continue to prove your value and achieve your milestones, if possible. Fundraising can be difficult, but when the time comes, you’ll be fully prepared to pitch.
If there is a foreseeable liquidity issue, don’t be afraid to reach out to your existing investor. Know your budget and how much you need to keep things running. Prepare a plan of how you will mitigate with the situation or leverage on it, and focus on future potential.
Some helpful tips to remember:
- Raise a small round from existing investors for strategic assistance — but we all know the uncertainty that comes with fundraising. That’s why it’s more important than ever to build a closer relationship with them, because when you need more funding, they’re more likely than others to fund.
- Plan fundraising earlier. It will definitely take a longer time. And since most of the investors are not travelling now and there are no more in-person events for them to attend (which occupy 50% of their time), it’s easier to get them on the phone. Geographical location is no longer a limit. With capital shrinking, your fundraising strategy needs to have an international focus.
- Look for all grants and non-dilutives that are available as your backup. Some global startups are even applying for government funding in Hong Kong as well. Again, don’t be afraid to look broadly and be creative.
- Your absolutely last resort should be financing from banks. Not a lot of investors like it, and we certainly don’t recommend it. One of the biggest warnings from the market is a looming credit crisis, especially in the US and China. Banks will also be stricter with non-guaranteed loans.
4. Most importantly, let’s look out for each other. In this difficult time we need more help than competition.