Hypothetically speaking, a startup gets some rounds of investment from VCs, operates for a few years, and run out of runway. What do these final months look like? Do the investors try to get their money back?
Hypothetically speaking, a startup gets some rounds of investment from VCs, operates for a few years, and run out of runway. What do these final months look like? Do the investors try to get their money back?
In my experience, as long as the leadership is somewhat transparent, it’ll be completely obvious. And usually begins with attempts to reduce burn rate like auditing of assets/expenditures and of course layoffs.
I’m assuming you’re asking as an employee and not functionally how to shut down your business.
Yep, as a regular employee. And we do lack transparency, and had layoffs last year. It’s also hard to read the signs as I’m in a totally different timezone and only see them in person a handful of times a year.
If you’re concerned about it, ask. Being direct is the way I would go. Something as straight forward as “what’s our runway looking like?” They should have an immediate answer for how long they can last at their current burn rate. And if they become cagey or refuse to answer these kinds of questions, it’s a red flag and it might be time to consider your options.
Though I suppose that depends on your financial security and how you think they would react.
I’m pretty direct with him, but I think he’s quite bad at awkward discussions and good at bluffing, so I don’t think I’d get a useful answer if things were going badly.