Little bit of a wake up call for founders right now.
18 months runway, or anything less than that, diminishes quickly. You need 24 months or enough to hit cash positive.
I’ve been there. Trust me. But now is time to make the tough calls, and wake the fuck up.
Acting now will significantly help you as time rapidly goes by.
In Privy’s history, I’ve done a bunch to extend runway ASAP. Here are some ideas based on what has worked for me:
Layoffs - sucks. Horrible. But this is business. Sometimes it needs to happen. Anyone whos been there for a few months or longer, and you’re not sure is adding value. Just do it the right way and give them the best package you can, accelerate their cliff, extend their exercise window. Whatever you can.
Annuals for discounts - the few times we got aggressive with this approach have panned out incredibly well. We used this pivoting from privy old to privy ecommerce. If you have happy customers, especially mmid-market paying a few thousand a year or more, this could significantly move the needle for you.20% off is not enough when you’re serious about using this to extend runway. Offer whatever it takes.
Re-open the last round. Already raised some money in the last 6-12 months? If you’re good about investor updates, and you’re truly making progress, now is the time to re-open the last round. You’re optimizing for cash on hand, not terms, in a market like this.
Cash for stock trade - outside the box, but I got my board to agree to give out more stock in the company to anyone that was willing to reduce their salary. We came up with fair grants based on reductions in salaries of $5, $10, $15, etc. Anyone in the company was eligible to participate. I was amazed at how many did (myself included). Turns out this ended up paying off big time in our acquisition.
Every minute counts.
And for those that think they’ll be able to raise in this climate, when you’re below 8 months runway, you’ve already raised $5M and aren’t even at $1M ARR, yikes.
This post was inspired by the convos I’m having with founders who have some traction, business is growing, but not growing fast enough, and not profitable.