Episode 1: A COVID-19 winter is coming for Australia’s startups

Do you have a plan for the impact of the pandemic on your startup? Get one, fast.

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Photo by Tedward Quinn on Unsplash

Arrivederci, angel investors

Expect angel and seed round capital worldwide to dry up, and in Australia, that means it will almost entirely disappear for a while.

Annyeong, first round VC cheques

While some Australian VCs recommend you bring forward your next capital raise too, when I consider the slow pace of raising investment in Australia and the rapid onset of COVID-19 so far, I don’t think any amount of ‘bringing forward’ is going to help, unless the round is very nearly closed already.

Zàijiàn, accelerator programs

Incubators and accelerator programs have been the startup industry’s work-around to address the shortage of early-stage investment in Australia, so you might have been expecting the number in Australia to hold steady, or even increase, if early-stage investors are planning to go into hibernation.

Xièxiè, Shenzen… kinda

It looks like the extreme restrictions put in place in China may have slowed the COVID-19 infection rate enough that we might see the great Chinese manufacturing engines cough and splutter back into life again soon.

What should you do to survive this?

First of all, take care of your health, your family’s health, and your team’s health. Most software tech startups can survive a couple of months of working from home, even under quarantine, but they will suffer greatly if 20% of the team is out of action with a high fever for a week or two, especially since that might mean a different 20% of your team down with it for the 4–5 months.

How long will it last?

It’s hard to know how long the COVID-19 winter will continue. Rather than plan to make your runway last three months or six months, you should plan to make your startup’s runway last as long as possible. The best way to do that is to cut to the bone as soon as possible.

Don’t expect most people to tell you this

Precautions are measures we take to prepare for events that most people are betting won’t happen. If you wait until the adverse events are occurring, you’re not taking precautions, since there’s no “pre”. Remember that it’s the irrational emotional reactions of people and business that are the real danger to your startup.

I’m Alan Jones, an EiR for startup accelerators, GP at M8 Ventures. Previously investor, founder, and early Yahoo PM. Opinions mine (but should also be yours).

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