With COVID-19 gripping the world, killing hundreds of people every day and felling companies, startup founders in Southeast Asia are a worried lot. They are already feeling the pinch and struggling to salvage their business.
‘How long will the crisis last?’ and ‘How to deal with a prolonged situation that may last more than 12 months?’ are the key questions founders ask each other, but no one has a definite answer to the question yet.
In light of the spread of the pandemic and its impact on businesses, SEA Founders (a community of Series A-B tech founders scaling businesses in the region) huddled together over a call to discuss issues and solutions to help each other tide over the crisis.
Of the 21 founders participated in the huddle, the majority participants cited delayed revenues and the urgent need to bring down the net burn as the top-most challenges. These two are also the high impact and priority items for most of them.
The inability to travel and delay in fundraising are the other major concerns.
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The meeting, which took place last week, also discussed the concerns of Southeast Asian founders in five key areas — revenue, cash, costs, employees, and funding & investors.
Revenue concerns
The concerns on revenue are mainly on longer sales cycles and unpredictability of revenue streams. The attendees shared that prospective customers negotiate more and expect discounts. The companies’ pipeline is weakened and deals are delayed/cancelled. Revenues forecasts are also impacted. As the situation gets darker, founders are unable to travel for lead generation and close deals.
Cash concerns
Delayed payments from customers is severely reducing the cash flow and runway. High OPEX and reduced cash flow are also harming their business.
A bridge round of funding or government-supported loans from banks could help improve the situation.
Costs concerns
Founders are also looking at cost-cutting measures, which will focus largely on employee salaries and benefits, and implement a headcount freeze. But how to reduce costs without jeopardising the ability to produce and deliver value is a challenge.
Employee concerns
Another worrying factor is the low employee morale, with impending pay cuts and freezes. It is a challenge to ensure that productivity does not slip because of work-from-home measures. The possibility of employees looking to leave because of uncertainty about the future and security of their roles also worries the founders.
Funding and investor concerns
The breakout has also impacted investor confidence. Founders are wondering whether investors are looking out for different things in times of crisis. The questions such as ‘which VCs are still in a strong position to invest’ and ‘whether to take bridge funding from existing investors even if it is not required at the moment’ are also in the founders’ minds.
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SEA Founders is a community that helps founders in the region scale faster by accelerating learning and fostering deeper relationships throughout the ecosystem. Its cross-regional programmes include the Founders‘ Coaching Pause, quarterly Masterclasses, and Local Forum Groups.
Currently, the community has 38 founders operating in different verticals (edutech, fintech, HR, F&B) and models (B2B, B2C, SaaS) and hail from Singapore, Bangkok, Kuala Lumpur, and Jakarta.,
The post COVID-19: Delayed revenues, worrying burn rates top challenges for Series A-B firms in SEA appeared first on e27.