What happens when a startup runs out of runway?

“So the short answer is yes. We actually had a term sheet on the table ready to close, and it was going to close in April, and the valuation was significant, and the funds we were going to raise was significant. And then, you know, we ran into the airports being locked down. It was actually an international investor. And so all of a sudden it was like, oh well, let's just hold and see what happens. And we all know that You know, that's code for, uh, we're reevaluating everything and we never, we never realized that investment. So, and the challenge for many startups, um, and I've learned how to raise capital when I don't need it now, but most startups raise capital, you know, when they, they need it. And, you know, they might start with a 12-month runway, but if it takes 6 to 9 months, that runway is quite short by the time you have success. Now I know that that doesn't sound logical when you say that out loud, but the truth is many startups aren't forward-thinking enough that, you know, they'll go, okay, well, I can see strategically I'm going to need growth capital in 12 months' time, I'm going to start that now. Yep. Whereas the trigger is often, you know, I've got 12 months' runway, I need to start thinking about raising again. And that's We were quite lucky now that we understand that, but back then we had very little runway going into COVID, which was quite terrifying, to be honest. Again, we hustled harder than we've ever hustled, um, to get through that period. But, um, it was one of the most terrifying experiences of my startup life because we have a fantastic business, you know, and As a founder, when you put a lot of energy into building something for a very long time and then all of a sudden it's under threat, you're like, it is a— there were many sleepless nights is probably the polite way to put that. But let's just say it was, it was terrifying.”

“And if you've got, if you had investors on your board, you know, I know that they were very, very worried about which startups had enough runway. We were already pretty close to breakeven. If we weren't close to breakeven, we would have been dead. Yep. So we were very lucky that we had an astute running of the business already. We were pushing to become breakeven prior to COVID, which was a little bit unusual. And I know that there were some fantastic startups, even much larger ones than us, that did falter because of COVID because they didn't have that runway. And what happened is the investor market shuttered, and then the real impact hit actually 12 months after COVID when inflation kicked in. And then all of a sudden the tech market completely changed. So there was a period prior to COVID where marketplaces were pretty hot property. And, you know, a lot of the pre-IPO funds were investing in marketplaces, wanting to take them to, to the stock market.”