Financing

3 Simple Things with Meredith McPherron

Meredith McPherron is a Venture Partner at Glasswing Ventures

Glasswing has so many promising technology companies in its existing portfolio, what advice are you giving them these days?

Our Glasswing portfolio is well positioned having a focus on AI-enabled enterprise software and cybersecurity companies which are seeing growth amid the pandemic.  We are advising our portfolio companies to stay focused on their fundamentals.  This includes 1) assuming a more conservative posture on their overall burn, 2) exploring appropriate sources of capital to weather the storm and maintain their market position, and 3) carefully examining and re-examining their product/market fit, making adjustments where and when necessary as the environment dictates. We recommend companies dig deeper into their customer’s world and even further downstream into the world of their customer’s customer to understand their underlying health and stability. This analysis allows them to anticipate potential challenges and opportunities that may not be readily apparent. There are exciting opportunities for entrepreneurs to think differently and push their thinking about how technology can help insulate, mitigate, and even accelerate their growth when faced with supply and demand shocks that force behavioral change.  It requires financial stability at the outset and strong leadership and organizational agility throughout when markets are in turmoil. At Glasswing, we encourage our companies to think about the offense even when playing defense. We support our portfolio by leveraging the Glasswing Platform, bringing them customers and revenue, helping them connect with the highest caliber talent, and championing our founders from funding through to exits.

You have helped a number of companies with their launches, what would you advise company decisionmakers about scaling in challenging times?

Scaling in challenging times requires greater organizational discipline and prioritization around a roadmap for expansion.  Focusing on high priority, profitable and well-vetted customers and customer segments, for instance, makes more sense than funding experimental pilots into new channels and segments.  New customer acquisition is always expensive but during challenging times, it can rise considerably as spending stalls on new contracts and services. For B2B models, focus instead on a “land and expand” strategy. If expansion is out of the question, lean into a “land and love” strategy to ensure the needs of those with whom you already have relationships and contracts are fully satisfied. When the economy recovers, these customers will serve as important ambassadors for future growth.

For CEOs, this is the time to engage in visible leadership, even if that must happen over Zoom or other UCaaS providers. In times of uncertainty, conveying a sense of confidence around your mission, compassion that times are challenging, and conviction that you can and will get to the other side is vital. It can engender a powerful “take the hill” mentality necessary for rapid innovation, pivots or scaling.

Avoid the natural impulse when “sheltering in place” to put your head in the sand and simply weather the storm.  Instead find ways to learn more and use the forcing mechanism of a tougher environment to drive innovation and creativity from your teams into your products and services.  Use the opportunity to connect with your customers to understand their needs, find new ways to serve them and build stronger loyalty and partnerships. Challenging times can often bring people together in deeper, more lasting ways than the more transient tidings of gold and glory.

In this tumultuous period, what should new innovative product companies do now to attract funding and maintain morale?

Learn from the unicorns which were founded during the 2008 financial crisis (e.g. Credit Karma, Slack, Uber, Venmo, WhatsApp). Their ability to see and leverage important behavioral changes resulting from the crisis and deliver innovative new products in response, was essential to their ensuing inflection and scale. The challenge is that capital markets funding innovation are most difficult to access in times of uncertainty. New venture funding outside of existing investments can quickly freeze up as caution and capital preservation become a greater priority. Start-ups seeking follow-on rounds are often met with suppressed valuations and requirements for stronger adoption proof points and higher level growth rates over longer periods of time.  If existing startups require additional capital to hit stretch milestones, they might consider bridge rounds with current investors to extend their runway, in addition to focusing on high quality execution with current customers and finding new and relevant ways to win as the market evolves.

To maintain or even boost morale, I recommend entrepreneurs remind their teams of their mission and vision for the future. Anchor them in realistic roadmaps and resources they can access to deliver against that vision. Set shorter term targets and goals for individual and collective work to provide a sense of traction, accomplishment, and psychic reward. This is the time to double down on culture, find opportunities to acknowledge how people are stepping up to “take the hill” together.  Great leaders will make lemonade out of lemons and provide their teams with the drink all start-ups thirst for: passion and purpose.

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