5 Tips for Emerging Managers Navigating a Downturn
Thanks for joining us last week at the “Virtual AMA: How Emerging Managers Navigate A Downturn.” ICYMI, here are our favorite takeaways from the panelists. Don’t miss the Slack community sign up below too!
1. Adopt a multi-fund mindset. Your first fund will always be the most difficult.
No one said that raising a first fund was easy. Even if that means going below target, lock it down so you can start investing right now. The most critical thing to do is to build credibility for a second fund, as that will be exponentially easier to raise.
2. Have a framework to manage the emotional turmoil of this situation.
Having an objective way to allocate attention and resources makes the decisions less emotional and can help create overall alignment across your partner(s). Embracing process or rule of thumb helps free up the mental space and avoid conflict.
3. LPs want to see a healthy balance of offense and defense.
LPs will always appreciate sober and informed decision making when it comes to the market reality and challenges you’re facing, but they also want to see intelligent risk taking where there is attractive opportunity amidst the market uncertainty. Keep your LPs well informed and they are likely to reward you with loyalty.
4. There isn’t one-size-fits-all advice for your founders.
The reality is that a correction will affect different companies in different ways, depending upon stage, sector and business model. Don’t try to provide blanket, overly-simplistic advice to founders as it’s unlikely to be very helpful (and may be harmful). Focus on the specifics of their circumstances and remember to be empathetic as you try to help them.
5. Focus on what matters most.
For some startups this could mean proving they have product market fit, while for others it’s purely an exercise of extending runway to reach critical revenue scale. It’s not clear that commercial spending on technology will slow down, so remain focused on helping founders on important missions navigate these dynamic times to the important milestones that will enable them to succeed.
If you’re interested in joining the Slack community for emerging managers please indicate your interest here!
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