The world has changed, Covid-19 has turned everything on it’s head and if you run a start-up company, especially one that might be pre-revenue, what does this mean for you? Is this the end of your company’s journey or is there a light at the end of the tunnel?

I had the chance to have virtual sit-downs with 8 current and former CEOs to collect their insights and experiences running businesses and raising capital in times of crisis.

There is much we can learn from past economic crises and world events. Many of the entrepreneurs that I work with are not only first time founders but also entered the workforce after the last financial crisis in 2008. I also fit into this demographic and as an investor have spent much of the last two weeks thinking about the impacts of Covid on start-ups and innovation more broadly. I want to be well informed and positioned to provide guidance to the founders in my network and make smart investment decisions going forward.

Before sharing the collective insights from these leaders, here are a few ideas that I’ve found important to keep top of mind.

– Entrepreneurship is inherently a high risk endeavour with significant uncertainty and often a lot of volatility.

– Every crisis is always unanticipated. If it was expected, it wouldn’t be a crisis. It will end, and we will get through this. We always do.

– Some of today’s most successful companies got their start in times of crisis.

As an investor, I can attest that even in normal climates, startups are always high risk and chasms between expectation and reality can form overnight. I’ve been involved in discussions with startups about expected acquisition offers that never materialized. I’ve had to cancel term sheets due to challenges around portfolio allocation. Covid-19 has just magnified that risk and added a whole new aspect to the risk matrix for entrepreneurs and investors.

What to do now?

1. Cash management

– Plan for the worst case scenario — assume revenue and investment capital goes to $0 through to the end of this year. How much runway to do you have? As an investor, I would advise you to look at ways to reduce your burn rate, focus the business on technical & product milestones. In normal times, you’d want to have 6+ months of runway, now you’ll want to make sure you can survive at least 12 months before you need to raise again.

– Speak with all your vendors and creditors to extend or defer payments. This includes your landlord as rent is likely your largest fixed cost. AR/AP is often a negotiation. Everyone just wants assurance that they will get paid and would rather have an upfront discussion to review terms rather than send you to collections.

– Can your management team take pay reductions to extend runway? This may be obvious, but do not ask this of your team if you are not prepared to take a pay cut yourself.

– If your company is eligible for Covid emergency response loans or wage subsidies take advantage of these programs and apply now!

– You may need to downsize your team. You will need to find the balance between managing burn rate and cutting the company down at the knees. Your messaging here will be key, act with empathy.

– If you have a customer and you know they are repeatable — focus on them. Ensure you are speaking with them and they know that you are here, and will continue to be here to support them through this crisis. Beyond letting them know how your business is addressing Covid-19, now could be a great time to also custom build new features and services for your high value customers. Team members that don’t support your current customers may not be essential at this time. Customers = cash flow.

– Lead with REVENUE — to generate revenue, consider what services you can offer to your customers (especially if you are B2B). I’ve heard stories from founders that have rented out your dev. team, consulting, collaborate with channel partners and distributors,? The focus on all these activities is generating cash flow not to focus on margin.

– Non Covid response grants should be a secondary source of cash flow. Grant organizations will likely be overwhelmed in the immediate future so may be slower to process applications, or be allocating smaller awards to more businesses. As the crisis drags on, there may be fewer dollars available for an ever growing number of applicants. Apply early.

2. Customer Support

– Don’t forget your customers! If you have existing customers, make sure you are speaking with them regularly. How are they doing during this uncertain time? How have their needs changed — and how can you help them?

– Don’t believe that your business (or your customer’s business) will be unaffected by Covid-19.

– Have you gone from a “must have” to a “nice to have”. What are the switching costs in the short run? If you do lose a customer, how likely are they to come back post covid-19

– Consider how sticky you are with your customers — are you integrated in their current business operations? If so, it’s likely that they will continue to be customers. When looking at your pipeline — what is driving these target customers to make purchase decisions [if they are buying at all] and incorporate that into your sales forecasts.

3. Message Matters

You need to communicate with all of your stakeholders during times of uncertainty. This includes employees, customers, suppliers, investors, and advisors. You’re checking in on them as much as you are giving them an update on your analysis of the business impact of the current crisis and seeking their input or support for your response plan. Be real with them. Do not sugar coat the challenges you are facing (they’ll see right through you), and aim to overdeliver down the road. People will be much more understanding now, in the height of the crisis, then they will be down the road.

You need to be thoughtful in how you craft your message as it will need to balance concerns for health and safety with that of business continuity. You are now one voice among many communicating with your customers, employees, and investors. Is your message on point with your brand and value add for your audience, or are you sending out just another Covid newsletter?? If I’m honest, my inbox is full of these emails at the moment and I just default delete them.

This last point is simple, but I can’t stress it enough. Don’t make big decisions in a vacuum. Involve your stakeholders in the conversation and invite them to develop solutions with you.


If you’re in the CEO seat, your team is looking to you for guidance and leadership. You are the barometer of the organization. Know that leadership does not equal having all the answers. It’s OK not to know what the post Covid world looks like or where the company is going today, but you are analyzing the market and developing a thesis on what the business needs to do to remain alive. As an organization and a team you’re all in this together — either you thrive or die together.

– Have empathy. Your team is balancing individual responsibilities with their corporate role.

– Ask for help. The capacity for others to offer help is unbounded. Do you need advice, introductions, product testers?

– Involve your team — even if you already know the action you’re going to take, consulting your team also makes them feel empowered and like the process was fair and unbiased.

– Remember, doing nothing is a decision. It may take options off the table for you and add additional risk.

You’re probably going to need to make some difficult decisions about employees, supplies, the future of your business. Bring an analytical approach to your analysis — eliminate emotion and look at the situation clinically. What actually needs to be done to ensure the business survives? Can the business even survive? Make your decisions, and then act with empathy.

You may come to the conclusion that you need to wind the business down. That is OK. Follow the above guidance with regards to empathy and messaging and you’ll get through this. Grieve the loss of your startup. Every single one of your stakeholders will be grieving this loss too.

Where is the market moving?

The trillion dollar question is what does the post covid-19 world look like?

Right now, it’s too soon to tell but the sooner you develop your hypothesis of the new normal, the sooner you can test it and iterate. Create your new-normal plan. This will determine where you invest and where you cut. It could take 3–6 months to prove out the new normal, so you want to do this now. Your plan should include specific timelines and metrics. This will help your team rally around the specifics of a cause and will increase the velocity of your team to get to clarity. And know, you will get it wrong. The key is to sense shifts and course-correct fast. It is all about agility and not getting stuck in your thinking.

The table stakes have changed — you need to determine what they are for your business today and what factors might impact you as things continue to evolve. Consider: what are the dots in your ecosystem and how do they need to be connected to understand your risks and mitigations?

I’m really interested in the future of work. How will an abrupt shift to working remote impact workplaces post crisis? I believe this is a huge opportunity for businesses to figure out remote work, end long commutes, reduce lease expenses as you don’t need a space for every employee. There will be significant investment in upgrading internet infrastructure to support high bandwidth internet in both big cities and smaller communities. As you might imagine, there could be second order effects in the residential real estate market as space for an home office becomes a requirement and location is tied to lifestyle not proximity to one’s work.

What could the long term market impacts of mass (temporary) unemployment be? As of April 3, 2020 more than one million Canadians have applied for unemployment benefits due to Covid-19. How does retail consumption change when there is mass income loss and uncertainty around one’s economic future? What do you buy when you’ve lost your disposable income? Everyday luxuries like craft beer and fine chocolates may have staying power.

And perhaps an unintended consequence of much of the Covid support, at least in Canada, is a nation-wide test of universal basic income. I will be watching from the sidelines with much interest over the next several months.

A word of caution — beware of the whiplash effect. If your sector is booming as a result of Covid-19 (e.g. food delivery, digital content, video calling etc.), what happens when social distancing comes to an end or if we fall into a recession. How might your customers behave? Can you position your business to pivot into sectors that are counter cyclical or recession proof?

Changing Investment Landscape:

In a post-Covid-19 world, the public markets will stabilize, the current cloud of uncertainty will lift, and capital at all stages will flow. I don’t have a crystal ball and can’t say when this will happen, what deal terms might be, or what sectors will be hot.

However, a stay at home order does not mean business stops or you are on vacation. Investor expectations are going to be very high. If you’re currently raising or planning to raise capital, expect changes in valuations (they were at an all time high anyway and cracks were starting to show), investor expectations, due diligence processes, and the time required to get to a ‘yes’. Consider how you will use this time to sharpen or refine your product, further develop your technology, talk to existing customers or validate new segments. Investors will be asking how you have used this ‘pause’ to derisk your business and come out of the gate at 100 miles an hour.

How much will valuations change? How big was the startup bubble? Expect some significant changes, but they will also be sector dependent — is your business a must have in the post-covid-19 world? A few of the CEOs I spoke with for this article shared their fundraising experiences during and after the bust.

– One CEO raised their first round of capital ($10M) with just a PowerPoint presentation. No product, no customers. As you can imagine, this was before the bubble burst. Fortunately, existing investors were supportive and followed on when they company needed additional capital, but this time ran a proper diligence process and the investment terms were more investor friendly

– Another raised their A round in the middle of the bust from tier 1 investors. Don’t choke on your coffee as you read these deal terms….but the company raised $7M on a $4M pre money valuation.

These are just a couple data points to help you build your mental model of how the market might evolve over the coming months.

If you are in the middle of a raise now, know that deals are still being done, but purse strings are tightening, due diligence is getting more detailed, and investors don’t feel the same urgency that they did even a few weeks ago.

– If you have existing investors, talk to them about a bridge round to shore up the company’s balance sheet.

– Maintain communication with investors in your pipeline. How is your business presently being impacted by covid and how is your strategy changing as a result? Do you have plan B, C, D, etc

– Accelerate due diligence if possible. The investment climate will likely get worse before it gets better

– Make sure there is a profitable business model that is within reach. Growth is not longer the strategy (this was already in progress), profitability is the driving focus and will excite investors.

– Be flexible on terms. SAFEs are out, warrants are in.

Work with your team to get your business to a stage where you are able to always operate due diligence and exit ready. This means your data room is populated, current, and includes the current status of the company as well your growth roadmap. Post-Covid may also create opportunities for consolidation and you want to be able to act quickly on any opportunity that comes your way.

Practice self care. Meditate, exercise, carve out an hour to read a novel, cook dinner. Make sure you carve out time to feed your soul and decompress. This will be a marathon, not a sprint, and make sure you’re taking care of your physical and mental health so that you can continue to be there for your team and key stakeholders.

Thank you to: Keith Ippel, Sandra Wear, Rob Gowans, Kyle Cheriton, Chris Ripley, Ian Bell, Vik Devdas, Mike Lightman, Chris Erickson, Jeanine Jonson, John McDonald for sharing your experiences with me and contributing to the development of this resource.

If you would like to share your experiences please get in touch!

Sarah Applebaum is an investor, mentor, and activator. This article was originally published on Medium.