ESG, Investor
Koska Gorilla Capital Fund 2017 Ky:n sijoituskohteet ovat nuoria ja juuri perustettuja yrityksiä, tähän rahoitustuotteeseen sisältyvissä sijoituksissa ei oteta huomioon ympäristön kannalta kestäviä taloudellisia toimintoja koskevia EU:n kriteerejä
Corona virus, Investor, Yleinen
Friday Mach
6, 2020
To: Gorilla
Capital portfolio companies
From: Risto
Rautakorpi
The Corona
issue – what to think about it
Note – I focus entirely on the business
implications, personal health & safety is of course #1 priority and I leave
those matters for the Healthcare professionals to advise on.
I rather
cry wolf than regret later, and as “only the Paranoid survives”, I’m OK to be
the paranoid.
No-one
knows yet what the end outcome of the Corona issue will be. But already now it
has caused a visible disturbance on businesses and economies worldwide and the
ripple effects are yet to be seen. Some businesses are affected more than
others, but very few will be completely immune. For some (like face mask
producers or remote working solutions) this can create a massive windfall.
Your business will be affected as well. In what way, when and how severely, depends. That’s what you should now form a view on, and do mitigation accordingly.
A likely
scenario for anyone selling to corporations: In the 1st wave, they
focus on their people risks: they cancel attending events, making business
trips, they ask people to work from home etc. In the 2nd wave they do
the immediate adjustments to their own business (such as airline industry), in
the 3rd wave they start calculating the cost of all that, and how to
balance the effect. They will try to assess what their customers do and how
that will affect their own business. The 1st thing they’ll do is
step on the brakes and will do only the mandatory until the dust has settled –
which means anything non-mandatory will be postponed. They will try to manage
costs, in anticipation of their revenues declining. This may mean layoffs,
freezing any new costs (such as development projects) etc. They will have to
add new issues on their agenda, changing the priorities. At this point you will
start feeling the heat.
These
“never seen before” crisis are part of the business cycles. I’m older than any
of you so I have experienced a few (and their direct consequences) myself: oil
crisis 1973, Chernobyl 1986 (this was particularly scary in Finland, due to the
typical wind directions), Iraqi war and 2nd oil crisis 1990, dot com
crash 2000, Financial crisis 2008. Not to mention the next tier – SARS, Thailand
Tsunami etc.
It’s not a
bug, it’s a feature. If you sail across the Atlantic you’re likely to get into
at least one big storm. You know that from the start so you prepare
accordingly. And when the weather map turns dark, you get ready: you take down
sails, close all holes, tie everything down, eat and rest while you still can,
make raingear readily available. When the storm hits you, you are prepared.
Then you do what you must to stay afloat, and just wait. Even the worst storms
end one day, the sun is shining again and smooth sailing can continue.
But while
sailing after is no different from sailing before, business after a crisis is
never quite the same as before. Oil crisis triggered the need to reduce
dependency on oil, Financial Crisis tightened regulation of financial markets
etc. The mankind is trying take measures that “this could never happen again” (rather
successfully, as the next major crisis is always a “never seen before” kind). Those
changes create a ton of new business opportunities.
The Corona
situation – once over and back to normal - will trigger such changes as well.
What exactly, we all can make educated guesses about. They too will create
opportunities.
Profits are
made during the high season. Strategic moves are made during the low season.
My call to
action to all of you:
- The eventual consequences of Corona
will affect all of you (and us, as a result). Meaning you all need to take it
on your agenda.
- You should analyse your situation
(and that of your key customers), play with some scenarios and form a view on what
you assume the implications to your business to be
- What is it you can and should do to
mitigate the negative effects. Create an action plan on what to do if the storm
hits you, and what is the indicator telling you the storm is on
- What new opportunities will this
create, once the storm is over. How could you best benefit of it?
I sincerely
hope none of this is ultimately needed and the world goes back to normal soon.
But it would be irresponsible to just count on being lucky. Hope for the best,
prepare for the worst!
Risto
Angel investor, Funding, Investing, Investor, Knowledge
Money is
always a consequence, not the root cause. You work – you get paid. You sell –
customer pays. You roll the dice and get lucky – you get rich. You have a
business (plan) that works – you get funding.
But getting
funding is not the end goal, not even for a startup. The end goal is to be able
to pay all that funding back, and some more. To reach that you need to have a
business that works. For getting there, you need the right strategy. The
strategy should be all about your business: who is your customer, what is your
offering, how you plan to win etc.
The journey
from where you are today to where you need to be one day is typically so long
that you may need to top up some fuel on the way. Funding is your fuel, helping
you to get where you need to go. But it’s just a means to an end, not the
reason your startup exists and definitely not your Northern Star. It should not
be the driver for your thinking and activities, do not let “what do I need to do to get funded” to
mislead you.
Early-exit, Exit, Investor
When the
buyer is willing to buy you at reasonable terms. The most critical element of
this is the motivation of the buyer, and that is out of your control. The “open
to buy” window is created when their strategy shows a need they need to address
and do it yourself doesn’t really cut it. That’s when they start looking, and
you need to make sure you show in their radar screen when they do. And that is
the part which you CAN control. Sometimes this happens earlier than you would
have liked, sometimes later. Timing is not in your hands. Accept it, and act
accordingly.
Early-exit, Exit, Investor
The best
time is when you start the company. The second best time is now. But the
preparation does not mean hiring an advisor etc, it is about doing the
groundwork that will increase the probability of an exit, when the time for
that is right.
About Gorilla, Angel investor, Investing, Investor
No, but this is still more of an “exception” rather than “the norm”. Some investors who have a similar kind of basic philosophy (model is more of a “scalable Angel” rather than “VC”)
https://www.kimaventures.com/ (the only European on this list)
http://rightsidecapital.com/ (we owe a lot to these guys for setting up a role model we have taken full advantage of. Big thanks to Kevin & al for the inspiration and openly sharing their thinking)
https://svangel.com/ (building on the heritage of the original SuperAngel Ron Conway, they have the longest track record to demonstrate the strategy works)
https://500.co/ (the most vocal on this list. For them investing is just one of the things they do)
There certainly are more but most investors with this strategy tend to prefer a low public profile, they focus on their business rather than PR.