How Can Startups Navigate The Current Global Recession November 2022
- During rounds, companies are pressured to give up more equity.
- Rounds may become smaller than in the past.
- The valuation of a corporation may be lower.
- Fundraising is more difficult and time-consuming during an economic slump.
- Extend your runway just long enough to get you through the downturn without diluting
- your firm or earning low returns.
- Reduce your burn rate while avoiding blunders that might threaten the success of your
- When money is tight, hire the knowledge you need to develop.
Strategies to Navigate Through The Global Recession :
Take actions to increase the length of your runway :
Raising capital becomes significantly more difficult during a recession. You need to extend your
runway or “cash out date” to ensure that you can survive on the funds you have. Spend money only
on improving your product or service or generating new revenue. There will be no more “nice to
have” expenses: Reduce the number of new projects, focusing on those with a high potential of success in the near future.
A recession is an opportunity for you to strengthen your relationships with your most important
customers. They are also apprehensive about the potential of a recession. Customers always want to engage directly with the team so take advantage of this opportunity to humanise these relationships and expand your customer base.
For venture capital, the years 2020 and 2021 were frantic, with many venture firms bidding up
start-up valuations to unsustainable levels. As the economy slows, those same investors will have
to choose which of their portfolio companies to prioritise and support. In order for portfolio
Embrace your best employees :
Recessions push employees to re-think their professional choices. If employees start to doubt the
survival of the company, they will take the calls from larger organisations in the market —
regardless of their potential .Get a head start on this. Spend time with your top performers to
ensure you understand their attitude. Employees always think their equity position is determined
by the most recent round of fundraising, hence down rounds cause employee anxiety. Losing great
personnel will have a significant impact on your business. Managing and maintaining momentum is
Highlight and rally around your distinct culture :
Culture has the greatest impact on employee retention. Employees recognize their market worth
and will remain with you if they are adequately compensated, pleased, and think they are making a
difference. Focus on culture and expressing the uniqueness and value proposition of your
December’s Journal :
We had the pleasure to host the WFP event on November 29th under ” WORLD FOOD PROGRAM ” which was a film screening of ” Wheat Trap ” for Mohammed Fawi. That then led with a panel discussion about Food Security in Sudan and the feasibility of growing wheat.
Suggestions of the Month :
“Leading at the Speed of Growth” by Katherine Catlin and Jana Matthews
As a startup founder, you are the leader of your baby company. If you’re doing things right, you might find yourself in periods of extreme growth where things feel chaotic and out of control. The authors of “Leading at the Speed of Growth” have written this book to help you navigate those growth stages and prepare yourself for the next phase.
“ Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist ” by Jason Mendelson, Brad Feld
If you want to understand venture capital deal structures and strategies, start here. This book is an exhaustive and definitive guide that covers everything entrepreneurs need to know about achieving successful funding.