Running a startup is one of the most
fulfilling and yet hardest jobs you can have. It is great to feel like you have
full control of your own destiny when you are building a business until you
start to see some signs that your startup may be dying. A slower than
anticipated sales cycle, an unforeseen competitor, investors that won't bridge
you, the list goes on and on. Here are the top five things you should do when
your startup is running out of money.
Don't
panic
First, you should explore whether or not the
underlying business issue can be fixed before you run out of money. This could
be an opportunity to evolve the business to be self-sustaining or attract more
interest. Assuming you did this and came up empty handed, it's easy to feel
like the business is crashing. You only have a couple of weeks of runway left
and employees depending on you. Do not panic. This will not help and can lead
to irrational actions. You should look for solutions especially if you source your funds from other
avenues beyond venture capital. In the grand scheme of things, you
are already doing better than most of the population in getting your idea off
the ground and into reality. You will survive this, even if the company does
not.
Prioritize
options
List out your options by creating a Google Doc,
so you can share with others such as investors, business partners, and trusted
advisors that may be able to help. At this point, you have two main options: a)
raise money or b) be sold/merge. List out potentially interested parties and
all of the reasons they may want to provide funding or buy/merge with your
company, e.g. an exclusive contract offer, amazing technology, world-class
talent. Ask others for their suggestions. Prioritize those that would be most
likely to invest, buy, or where you have a close relationship.
Execute
Set up calls and meetings from your list of
potentially interested parties. Be happy when someone says 'No' so you can move
on to others that may be a 'Yes.' Keep updating your list and stay focused on
the best outcomes. You may even be able to get two parties interested so they
can bid against each other. If nothing is coming to fruition, think of ways to
cut back so you can survive another day. This may mean laying off employees
while you completely evolve the business model.
Stay
level-headed
There will be good calls and bad calls and
numerous ups and downs. Don't get too excited by every positive indication.
It's not over until the deal is done and money is in the bank. It's also not
over until it's over, so don't be negative until it is the last second of
operations. Be realistic but optimistic, and keep fighting.
Thrive
There are so many investors and venture
capitalists & funds out there. Some of them include Velocity Capital 120m FintechVenture Fund, and 500
Startups among others. Hopefully, you found a good investor, merged/acquired,
or completely evolved to a business that can support itself or attract more
attention. If not and the business died, do a post-mortem. Reflect on lessons
learned. Share them so others can benefit and you can demonstrate to the world
that you will carry your learnings into the next venture. You will always have
another chance. You will thrive.
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