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Investor Advice During a Downturn: Don’t Panic • londonbusinessblog.com

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How To Compete Without Losing Your Mind – And Your Runway

Compete in an ever crowded space can be nerve-wracking. Compete in an ever busy space in the midst of a challenging fundraising environment even more unnerving.

We all know that cash won’t be nearly as readily available in 2022 as it will be in 2021. This puts startups in a position to compete without losing their minds — or losing the runway.

At londonbusinessblog.com Disrupt 2022, I interviewed Disaster CEO Eric Glyman, Airbase CEO Thejo Kote, and Anthemis partner Ruth Foxe Blader on the topic. Glyman and Kote talked about how they work to preserve capital, while Blader offered some of the advice she gives her portfolio companies. And she didn’t hold back.

For the unfamiliar, Glyman and Kote both run startups in the expense management space. As friendly competitors, they recognized that while the category is not a winner, it is important to differentiate and continuously innovate.

Glyman said, “One of the things we’ve done in our business is look at the cost of acquisition — to fully recoup the costs deployed — and we’ve lowered that threshold,” he said. “And so our view is that we want to grow as quickly as possible, but with a much faster tolerance – in the same way where you can get a higher return elsewhere, by applying that strict framework to where you choose to put capital. . We think this is the right approach for this environment.”

For Kote, it’s all about focus. Airbase, he noted, has historically focused on medium and early commercial space. He was referring to “the crazy 2021 period when there was all the madness around investments in this space,” where investors were “willing to pay 100x, 200x multiples.” Rather than frantically trying to change Airbase’s model to meet expectations, Kote said the startup continued to operate as it had always done.

“So a silver lining from a focus perspective that came in for us this year was, ‘You know what? None of that matters,’ Kote said. gross ARR. So we’ve really stuck to what we’ve always done, which is targeting the mid-range. And that meant freeing up resources in all sorts of ways, giving us an extra runway.”

Meanwhile, Blader – whose company invests at all stages of its life cycle – shared her belief that “this is a sentiment-driven industry, and when the music is playing, everyone is dancing.”

“The people who danced in 2021 and raised a ton of capital — enough capital to break even with maybe a little bit of burn-cutting — are probably feeling pretty good,” she said. “And the people who have really under-raised or haven’t raised capital or raised at a valuation where they really won’t be able to close the gap between where multiples were and where they are now are somewhat panicked.”

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