The novel coronavirus (COVID-19), and its sweeping personal, societal, and economic effects have plunged the globe into a new paradigm. Whether you’re an individual investor or a fund admin, you’ve likely spent the past few weeks settling in into the “new normal” while forecasting the effects of market movements on your portfolio.
This may be the first chance you’ve had to think specifically about each of your unique venture investments--and you wouldn’t be alone. Relatively few investors have the bandwidth to offer meaningful help to their portfolio companies--which is unfortunate since startup founder word-of-mouth is an excellent source of deal flow.
How you respond to the current situation will affect your deal flow later. So we’ve compiled a few simple ways you support your venture portfolio.
How to structure your help: Specific over Generic
Avoid “Data Dumps”: You’ve probably received countless newsletters offering a generic roundup of COVID-19 information. Chances are, your portfolio companies are receiving them, too.
These “data dumps” generally yield low ROI for founders: either the information is not specific or timely to the company’s needs, or it’s promotional in nature. These messages often end up in the trash.
Instead, be direct and brief with your outreach. Come with a specific offer of help that is relevant to the company’s current needs and reflects your area of deep expertise.
In general, consider the following when structuring your help:
Help should provide the founder or team a takeaway that solves a specific problem in the near future;
The offering can be delivered in a timed window and instruct a simple, achievable action plan.
10 Simple Offerings of Support from Investors to Portfolio Companies, by Area of Expertise
Be a sounding board for current analysis of cash flow projections and budget changes, and guide the company through cash flow planning.
Gather the latest information on local, state, and federal tax and fees deadlines, and provide your companies with guidance or a living checklist.
Create a guide for companies to get the most out of their current banking partners and capital options, including accessing COVID-19 relief programs, applying for SBA loans, and opening credit lines.
Provide guidance on capital raise activities and general capital market outlook; scenario-plan different raise volumes and effects on valuation due to market changes.
Sales and Marketing Support
Provide guidance on augmenting acquisition channels, retention strategies, and product offerings based on reduced marketing budget.
Share your survival marketing tips -- for instance, your experience during the financial crisis and dot-com bubble is a valuable resource.
Scenario-plan adjustments to growth forecasts based on changing trends in consumer and enterprise spending.
Operations and HR Support:
Be a sounding board for staff augmentations and layoffs; create a checklist, help develop internal communications, and guide the team through this difficult process.
Aggregate data around unemployment access and COVID-19 specific relief for employees on the local, state, and federal levels.
Provide guidance on logistics and operations efficiency; guide the team on high-impact cost-cutting strategies that are rooted in the economics of their operations systems.
What does it look like in practice?
Joyce Cenali, Managing Partner and COO of Big Rock Partners, held a webinar for portfolio companies that focused on access to stimulus packages, and industry-specific cost cutting and cash flow management strategies.
“We know founders are slammed and time is precious while everyone is adapting to the new situation. So my goal for the webinar was to deliver meaningful information that companies can use in the next 1-3 weeks. We also have several portfolio companies in Cannabis--with all the different sources of information out there, I want to lend them some research bandwidth by providing up-to-date guidance specific to that industry.”
Ready to put it together? We can help.
Whether you want to work with companies directly or create a guide for an associate, we can help with organizing and delivering your help offering.
Reach out to Leah@greenprintgrowth.com to get started.