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?
Often the VC’s, if they have control of the company, will bring in “gray hair” managers to try to turn things around. The kids formerly running the show may or may not stick around. The first thing the gray hairs do is cut back to a skeleton staff, cut the snacks, and even coffee. They’ll try to sublet the surplus office space. One startup I worked at had a fire sale on desks and laptops and such. I got some good deals. Infosec goes out the window, as do most new features. You trim back to the barest minimum infrastructure and staff. If your books seem reasonable, then they try to sell what is left. It can be very strange being one of 5 or so essential staff left after 50 or 100 of your coworkers are gone.
Small yet essential tip:
If you’re one of the last 5 left after 50 or 100 of your coworkers have been laid off, take the hint and move on. The company is circling the bowl. You will be left with nothing when they go under, as the execs cash out what’s left of the company and creditors take the rest. Even if the company is sold and the new company seems to take you on, usually the leftover people will be laid off once knowledge transfer is complete. Don’t think that you have any specialized knowledge that they can’t afford to let go…new execs generally don’t care about that, they only look at the bottom line. Someone cheaper can and will do your job.
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