Fundraising in a lockdown: when, how, and managing runway

Angela Logan, March 20, 2020 4 min read

With a global pandemic underway, and economies still reeling, we understand that this is a crucial moment for SMEs everywhere, but that tech companies have their own specific set of challenges they’ll be facing in the coming weeks and months.

A flash survey of current class and alumni of our 22 growth programme cohorts, found that 77% of companies believe that cash flow will be a top challenge over the next 3 months, followed by raising investment (57%), sales (53%), and securing new customers (42%). 

The most popular question these scaling tech companies had for us could be summed up by “How are (a) angels (b) VCs likely to respond and think about this blip?”

To answer this question and more, this week we gathered remote panels of industry leaders including Eamonn Carey (Techstars), John Spindler (Capital Enterprise/AI Seed Fund), Akriti Dokania (Octopus Ventures), Laura Connell (Balderton), Eze Vidra (Remagine Ventures) and Maria Wagner (Beringea) (thank you all 🙏) for webinars on fundraising in a lockdown, pre-Series A, and Series A+. With great feedback from the 180+ founders in attendance, we thought we would share some of the day’s biggest tips and takeaways.

Everyone is adjusting to the ‘new normal’ – even investors. Some will be business as usual, however, it is likely that some investment funds will become more cautious and may prioritise investing into their own funds. Everyone is taking stock, and adapting at the same time and pace.

Concentrate on extending your runway

Understand what your runway is. Where will you be in 6, 9, 12 months time? An extra 3-6 months runway will make a massive difference. Do everything you can to secure it. Do whatever you can to keep going until at least early 2021. Buy yourself as much time as possible. Take only what you need to survive and do everything you can to keep the lights on until 2021.

Mid fundraise – consider your options and communicate

Founders might want to reduce the amount they are raising. If you are in the middle of fundraising, try to figure out who can commit the capital and actually wire it. Proactively call your investors and set out your strategy of what you are going to do to mitigate effects of the crisis. Founders who communicate best with investors and staff will come out best.

Think about short-term opportunities

Proving you can adapt will gain a lot of faith from investors moving forward. What opportunity has the ‘new normal’ enabled and how might a tweak, feature or pivot be used to leverage it. In the meantime you can use the time to focus on your product and community, securing strong fundamentals for when business picks up again. Think about how you can galvanise small things that will have an effect.

Have honest conversations

Call your stakeholders and have honest conversations with them about the pandemic. Explain your plans and your strategy for attacking it. Ask them if they can support or not.

Your valuation might be affected

Even companies that have done well will be affected. If it’s a choice between survival and the alternative, valuations are not as important as getting money in your business today.

Talk to your network

If you are facing a difficult decision, perhaps on a new valuation, reach out to your network. Ask questions, ask for help, ask for advice, ask for guidance and feedback. People will be generous with their expertise at a time like this. They will want to pay it forward.

Maintain customer relationships

There may be a decrease in demand, but now is the time to demonstrate traction. Any data is better than no data; it is better to have users than no customers. You can still prove the worth of your product. Doing nothing is not an option. Do what’s in your power. Don’t wait for a miracle. 

Look at your roadmap and make adjustments

Regroup and change your plans if you need to. Things are different now. You can’t just keep doing what you expected to be doing. Work out what is a ‘nice to have’ and what is a ‘need to have’

Check out grants and public initiatives

Take advantage of the latest government support, up to date information here.

Be prudent, be cautious, be aware

Take a fresh look at your roadmap and make sure your money is being deployed correctly. Some activities like high-touch, enterprise sales may become harder. Lower-touch models like SaaS might not. But it’s unlikely you can carry on with the same plan before the coronavirus hit.

Scenario planning is key. Plan for normal revenue, 15% revenue cut, a 30% revenue cut etc. to understand the different scenarios and adjust accordingly. Be prudent, be aware and be cautious, and make adjustments based on how your reality develops against your forecasts.

Don’t assume cheques aren’t being written

Despite some talk to the contrary, it would seem many VCs are still “open for business”, in ongoing conversations with prospective companies, and looking to continue closing deals in the coming days, weeks and months. Don’t be put off by the idea that cheque books have been closed in these turbulent times. 

Do what you can to help

Tech undoubtedly has the opportunity to help find rapid solutions to some of the challenges the world is currently facing, manage us through some tough periods, and contribute to rebuilding an economy on the other side. You need to do what you can for your business, clients, employees and communities, and the Government needs your help too. They’ve set up three dedicated emails if your business feels able to support their efforts:

And support other founders. The UK tech and founder community is one of the most collaborative and supportive in the world. We are continuously humbled by the readiness of our community to pay it forward through our programmes, and know that generosity spreads far beyond Tech Nation sessions. So share your advice, your tips, and lend an ear to those in need. Stay safe, and sing Happy Birthday (x2). #WeAreTechNation

Coronavirus, funding, Growth