What are investor sentiments in the midst of a global crisis?

Sequoia Capital published a post with a graphic that summarizes the mainstream investor sentiment in March 2020, in the middle of the Coronavirus pandemic. 

https://medium.com/sequoia-capital/the-matrix-for-covid-19-c25bd5195f46

The framework in this article says it all. The post presents a matrix with three scenarios outlining decisions that entrepreneurial leaders can make that is inside their control:

  1. Plan A: No change to plan
  2. Plan B: -15% Op Ex (read: A moderate layoff)
  3. Plan C: -25% Op Ex (read: A big layoff)

Each scenario results in a different runway(read: Time to run out of cash) depending on the length of the lockdown . The longer the lockdown, the longer the low revenue trend and the shorter the runway. And the more attractive Plan C looks from a company survival standpoint. 

Does this mean everyone should rush to execute a reduction in force? Not exactly. The matrix is meant to be a framework for leaders to analyze their situation. Your mileage may vary. But it is helpful, if sobering, to see what mainstream investors will be advising their portfolio companies to do moving forward.

 

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