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Entrepreneurs: how to save your start-up?

Alive or dead? How to save your start-up before it’s too late.

The tech crises of 2000 and 2008 lasted 2 to 3 years. Today, that means having 30 months of cash on hand, which few companies have.

It’s time to be honest with yourself. Ask yourself if you’re actually going to survive. And yes, before profitability comes survival! Just because you’ve raised money before doesn’t mean you’ll be able to raise again.

There are fewer Series B rounds than A, and fewer A than seed... Raising capital is reserved for the best.

Seriously consider the possibility that you won't be able to raise funds.

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When is it difficult to raise capital?

Every situation is unique, but to put it simply, if you have the following metrics, raising funds may be difficult:

• Revenue growth < 2x compared to the previous year
• Gross margin < 50%
• Net revenue retention < 120%
• CAC payback > 18 months
• Burn multiple > 2 (relative to net new MRR)

Right now, VCs are deploying less capital and focusing on hot topics (like artificial intelligence) and the most promising start-ups.

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Other options when you can't raise funds

If you can't raise, you still have two options:

• Initiate an M&A process if you still have 9 to 12 months of cash left.
• Reach break-even (to do this: growth > cash burn).

In any case, reduce your cash burn:

• Lay off staff quickly (the first step to take)
• Cut ad and marketing spend
• Raise your prices (and stop losing money on every sale)
• Change offices....

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As a CEO, you need to be 10 times better than you were during growth periods. Focus on your cash burn metrics rather than growth. Know all your numbers inside out.

You are the only pilot at the controls!‍

And to end on a positive note, Google, Amazon, Airbnb, and Stripe were all created during times of crisis.

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