Economic crisis The past two years have forced startups to look for new survival strategies. Startups today generally fall into two camps: the few who can afford to continue business as usual because they have a strong market position and strong financial base, and the majority are forced to adapt to ever-changing conditions.
Among the latter there are two types:
- Those who are in bad shape.
- But those who ascend can easily fall.
The venture capital market isn’t about constant growth, and when a startup is driven by profit over demand, the whole point of its existence is moot.
In these tumultuous times, only a miracle can help the first kind succeed. The second type, however, has a chance not only to survive, but to thrive. This makes it critical for them to make the right strategic decisions now.
At this critical juncture, the opinion of venture capital market leaders, advisors and experts carries a lot of weight and many founders publicly and unequivocally advise to extend the runway of their project and push it into the black. A large number of companies have embraced this idea with enthusiasm, but the sad truth is, this is probably the worst advice for most startups right now.
One of the most interesting companies in our portfolio has fallen victim to this advice. A mentor advised the founder to extend their flight as long as possible. We looked at how they could have achieved this and found that the proposed cost-cutting measures had undermined growth. At that time, the project would not be of interest to anyone. why?