What Should You Do if You Don't Have "6 Months of Cash" When You Go to Raise Funds?
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Before you do anything, make sure you have the product/market fit. If you have, you probably have exhausted all the cash and have maxed out on loans you could obtain from friends and families which was the case with me. You probably believe that VCs must be ready to invest but you hear them say, you are a few months and traction away for that. Now, that's when you are in the 'Valley of death'. Many startups succumb to the pressure and don't make it. Few survive, identify the most important part of the business and keep that just alive for some hopeful day. That period for us was about 4 months. There's no way I was going to know how I'm gonna pay my employees every month, though you see traction moving up nicely. But, its almost always the case with startups, even the ones with a brilliant product with great customer following. We finally found an investor with amazing talent that's invaluable to our venture. But, the experience on the whole was very humbling.
Here are some things I now believe are important in this phase:
Surrender - You don't always control the outcome. There are things that needs to come together and you can only make your effort and have the vision and hope the universe agrees with you and helps you somehow.
Pivot or Persevere or kill it - If you don't have enough traction, if you are not sure why people aren't buying your product, if you still have been doing the same thing for 6 months now and still have no clue - think all over again. Follow innovation accounting from Lean Startups and quickly get to the happy place of product/market fit. Then network like crazy. Think of all the ways you can find an investor. I connected with Alok Kejriwal for help and he was did us a favour by pushing the word out. Just pick up the number and call anyone you think might be of help. Luck favours the brave and opportunity, the connected mind.
Inspire through confidence - There's nothing more important to a venture than its founders remaining calm, always learning, willing to experiment and change the configuration of your products, find the right price to sell, identify the engine of growth or just about anything that he'll do if the company is funded. When you show signs of a thriving startup and exude confidence, you'll influence everyone who works with you. In our case, we were thrown out of our office since we couldn't pay the bills for months. Our employees used to work from a parking lot and the rest of us moved into one of the employee's one room apartment and operated the whole company from there. Salaries didn't come sometimes or it was paid pate and in installments but we had zero attrition.This wouldn't have been possible if people don't buy your dream. Fortunately for me, they did and thankfully, my partners are amazingly inspiring too.
No excuse - When the chips are down, some of the basic tasks like meeting your customers to get their feedback might seem irrelevant. One would rationalize that there are bigger things to worry about and stop learning the right way to do things. There's no excuse to not strive for improvement even when you don't have money to pay the bills tomorrow.
Inuition - When there's no sign of money coming in, when your confidence is shaken up, when your ego is shattered, there's only one thing that can keep your venture alive. Your sound intuition that shows you clearly how its all going to work out well eventually. I always believed that any great enterprise must have an amazing story. When we had to operate from a parking lot, I kept telling myself how amazing this story is going to be. It inspired me. Troubles fueled my passion and proved how deeply I am convinced about my idea.
You can only choose to work on a great idea, dream of making an impact and start it with the resources at hand because when nothing comes your way and you are about to give up but still haven't, help arrives. It almost always does. But, for that you need to show all the signs of a wonderful venture at its early stage. You need to show how your customers love what you offer them. Just hold on to what M K Gandhi said "Find the purpose. The means will follow".
Good luck during these tough times but remember, if you get it right, you'll be celebrated for exactly the suffering you are willing to take up on yourself to move the human race forward!
Author: Krishna Chidambaresh, Co-Founder, Yo!Potato
