The COVID-19 pandemic has forced many business sectors under water, and has paused fundraising activity due to uncertainty of the market. A recent study by Israel’s customer research firm Wizer concluded that more than half of participating investors are cutting back on startup funding, or holding off on investments entirely. Another 47% of investors believe the aftermath of the pandemic will last a minimum of another six months to a year.
It is true that the market has shifted greatly and companies have moved from focusing on growth to focusing on survival and profitability. Even more challenging, venture capital firms have cut back on funding opportunities due to the market’s uncertainty. But despite these stats, there are still ways and new avenues for unrelenting startups to raise capital for their firms. It will certainty take a pivot in strategy and a reconsideration of how a company approaches business, but it is possible. Here’s what you should consider:
Prepare a strong financial strategy, and have cash burn under control
One quality that investors may seek out when approached by startups for funding is a founder with good burn mechanics. Startups should be prepared to showcase a sound financial strategy that prioritizes reducing higher cost line items over the next two years.
Agility and nimbleness are key in this business landscape
Companies that are able to showcase how they can diligently and successfully adapt to the business landscape shaped by the pandemic may catch the eyes of potential investors. VCs still willing to invest are looking at companies that can successfully respond to the pandemic and maintain, or even increase, their profitability. Wizer also reported that 40% of VC respondents recommend startups leverage the COVID-19 pandemic creatively, react, and adapt accordingly. VCs are considering companies that (when applicable) can swiftly move their businesses to digital platforms, and leverage new possibilities.
Learn from other startups
Not quite sure where to start, or simply need inspiration to revise your VC pitch? Check out what other startup companies are doing, and learn from them. Now more than ever is the time to network, and the networking scene has moved to online options. One option is tuning into The Startup of the Year Online Pitch Event, where U.S. veteran-led companies will compete for funding in front of a panel.
An important point to remember is that earning venture capital funding and seeing it through the full process to eventual exit is a long game. According to MIT, the time frame for successful companies is typically 10 – 15 years. There aren’t “quick schemes,” or fast tracks, and VC funding requires dedication to your company, grit, and patience. Just like the time it takes to develop a funding package, it will take time to create and strengthen a relationship with a potential VC. Don’t lose sight of your goals during the pandemic – this is a testament to your entrepreneurship. Keep pushing forward, and create new approaches to the challenges at hand.