Edition 4: How to operate during a downturn; State of Crypto; Choose tech not finance;
We invest in the Future of Businesses: Web2 / Web3 Infrastructure your company should care about.
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2023 State of Crypto Report: Introducing the State of Crypto Index (a16z)
Overall, the report reflects a healthier industry than market prices may indicate, and a steady cycle of development, product launches, and ongoing innovation.
We’re still early in web3, but we’re no longer at the beginning. Stepping back from short-term volatility reveals a more predictable pattern: a steady product cycle that is distinctly different from the financial cycles that saturate media attention.
Finding the right cofounder (Simona Alice Huebl)
According to Harvard Business School Professor Noam Wasserman:
65% of high-potential startups fail due to conflict among co-founders.
And according to the Startup Genome Report: solo founders take 3.6 times longer to scale than founding teams.
How To Operate During a Downturn
At the Alternative Investment Management Summit earlier in April, the one message was clear ➡️ it will only get worse, before it gets better. Investors and founders, should brace for a hard landing.
As we can see, number one reason for startup failures is inability to get cash in time. Founder, calculate your runway ASAP if you have not already done so.
Divide the cash in your bank accounts by your net burn rate. Net burn rate is calculated by subtracting your costs from your revenues. The main issue is for you not to overstate revenues or understate costs. Be realistic and use historical values, resist the urge to use projections.
Runway = Money / Net Burn Rate*
*Net Burn Rate = Revenue - Costs
You have £1,250,000 in your bank account
You had £250,000 transferred from your corporate clients last month (revenue)
Your total expenses amounted to £400,000 in the past month
That means your Net Burn is £250,000 - £400,000 ➡️ monthly net burn rate of £50,000
That puts your runway at £1,250,000 / £150,000 per month ➡️ 8 months before your bank account is empty if all else remains equal
A few ways you can extend the runway
Creating a structure to prepare for various liquidity scenarios is an excellent initial step to prolong the runway. Founders must assess their financial situation in terms of expenditure and devise a plan based on different macro conditions that may be beyond their control. You can adjust the Sequoia’s Matrix for COVID-19 to any macro scenario.
Re-evaluate Capital (CAPEX) and Operational Expenditure (OPEX) and adjust accordingly
When facing budgetary constraints, it is crucial to adopt a cautious approach. On the CAPEX side, defer plans to purchase fixed assets like real estate, new laptops or furniture. On the OPEX, evaluate the possibility of using a coworking space instead of renting an office. Allowing non-physically essential employees to occasionally or permanently work from home can help free up some budget space. Minimize payroll spending by outsourcing accounting, legal and marketing services.
Speak to other founders and investors!
Take advantage of your network. Many startups are facing exactly the same funding issues as you are, so speaking about it 1:1 or in a group context can give you a solution you may not have thought of just yet. Remember, you are not alone.
🤑 April 25 (virtual)
Winning Pricing Strategies During a Downturn (Octane and Simon-Kucher)
Get valuable insights on how to:
Identify the most profitable pricing strategies
Create value-based pricing models that resonate with customers
Implement price increases
Apply churn management strategies
💻 April 27 (virtual)
How to automate away admin (Sifted)
Automation is changing the game for tech workers — promising to eliminate manual tasks, streamline processes and reduce siloes. As European scaleups slow down hiring to search for profitability, can automation be a silver bullet?
Streamlining operations: Which tasks should startup teams automate?
Getting internal buy-in: How can founders and leadership ensure teams adopt and use automation tools properly?
Future of work: How will AI and automation change the nature of work?
💻 May 9 (virtual)
Microsoft SaaS Day for Startups
Discover how to unlock the power of Software-as-a-Service for your startup:
Current industry trends and strategic choices of cloud and technologies,
Discover how AI will accelerate product development,
and understand best practices for building SaaS solutions
Various Roles • Pretiosum Portfolio Companies
Web3 Career website • Browse 29,920 blockchain jobs in web3 at 5,529 projects
Discover your Next Opportunity • InnovatorsRoom
📖 This month we are reading Range: Why Generalists Triumph in a Specialized World by David Epstein
Provocative, rigorous, and engrossing. David Epstein examined the world’s most successful athletes, artists, musicians, inventors and scientists. He discovered that in most fields - especially those that are complex and unpredictable - generalists, not specialists, are primed to excel. Generalists often find their path late, and they juggle many interests rather than focusing on one. Generalist funds, do you agree?
🎧 And listening to Marketing Web3: Audience, Community, More by a16z
All about marketing, and Web3 - not just for marketers already in or seeking to enter Web3, but also anyone doing community marketing / community management, devrel (developer relations); or simply doing marketing in Web2 or classic growth marketing, seeking to understand the latest trends and tactics.
Please note that any charts, data, or projections discussed are subject to change without notice, may differ from opinions expressed by others, and are for informational purposes only. They should not be relied upon when making any investment decision. The content speaks only as of the date indicated; Pretiosum Ventures has not independently verified third party links or sources, nor makes representations about the enduring accuracy of such information.