Andrew Chung on How Startups Should Adapt to COVID-19

Due to the coronavirus pandemic, there has been a drop in startups which has reduced employment opportunities across a variety of industries. Many businesses have been forced into budget cuts and employee furloughs because of the harsh economic times. After a virtual portfolio meeting with several company CEOs to discuss COVID-19 challenges, Andrew Chung, founder of 1955 Capital, provided the following takeaways for how startups can adapt to this new reality.

Runway Planning

According to Andrew Chung, runway planning entails engaging strategic partners who have been severely hit by the crisis. Some businesses have experienced significant downward pressure on market caps and are dealing with furloughs and budget cuts. The number of people filing for unemployment has been on the rise after the lockdowns as businesses continue to feel the effects of coronavirus. As a result, it is difficult to predict how long it will take before things come back to normal.

Runway extension entails planning when to raise the next round and meeting milestones in advance. For example, businesses can plan monthly cash burn over time, which may require fundraising. Startups may need to decouple their burn rate from unpredictable timing of a return to regular activity when strategic partners return their phone calls.

Level the Playing Field

Breaking geographical barriers is also an essential part of adaptation. According to Andrew Chung, businesses should be looking at the global picture and learn from those who have already adapted to the conditions. Countries like China and Taiwan can provide a ready market because they have already reopened their economies.

Startups can also adapt to the health crisis by rethinking their distribution strategies. Travel restrictions and social distancing rules have forced many industries including retail, hospitality, travel, and restaurants to slow down their businesses. The lockdown restrictions have forced changes to distribution strategies, such as adopting online marketing and direct-to-consumer opportunities.

Rethink Approaches to Fundraising

There are other potential sources of funding that you can find during this period through more creative means. For example, some funding sources for startups can come from government grants and R&D programs if you have a tech business. All businesses need to create a portfolio that will be favorable to investors, says Chung.

Secondly, businesses can look toward family offices for possible funding. These are less bound to the institutional framework for funding, especially when dealing with a well-capitalized business. A startup can seek investors from family and friends who have faith in their ability to create profits.

Adopt a Global Perspective

Startups can adopt this global perspective by understanding how customers are acting in other countries. Regions such as Asia already dealt with a similar health crisis during the SARS outbreak, and thus have prior experience on how to recover. Startups can monitor how their business counterparts in Asia are doing during this current pandemic.

Importance of Team Morale in Remote Work Environments

Such approaches include regular check-ins to individual workers and the creation of virtual opportunities that can replicate the physical interactions within the workplace. This allows teams to stick together during this crisis and keeps employees motivated. Some startups have remote workers whose morale and productivity will be improved by a team-oriented focus.

Conclusion

Originally published at http://companyleaders.org on July 24, 2020.

Founder of 1955 Capital, Inventing a New Global Future | ClimateTech Venture Capitalist based in San Francisco, CA | Learn More: https://andrewchung.com/