After the Coronavirus reared its ugly head and forced to a halt most of the industrialized world for two months, companies across all industries and geographies are eager to restart after the lockdown.
There is a problem. Most of the businesses are left with no more than nine weeks’ worth of cash in the bank and with one of their greatest single asset, their supply chain, entirely disrupted.
Like a magma boiling inside a volcano before the eruption, there is a build-up of demand for substantial capital to feed the economic system in the short to mid-term ready to explode at unimaginable levels. The Coronavirus outbreak will cost more than some of the preceding financial crises and natural disasters combined. But the temperature will go from scorching hot to freezing cold. In fact, this is only the tip of the iceberg. The lay of the land shows a more profound systemic risk than the shortage of liquidity: the structure of nearly all companies that now seek capital, including, perplexingly enough, most of the technology start-ups, is obsolete beyond words. These companies represent millions of jobs around the world and their survival is key to the stability of many countries.
So, the global economy has a great deal at stake. A lot of restructuring is needed at every layer of a company’s operations but more importantly, founders must go back to the drawing board and rethink from scratch the way their businesses are imagined and conceived. There is little use for a nineteenthcentury organizational layout when you must tackle complex, twenty-first-century global competition’s issues. It is like going to repair a personal computer with a plumber toolbox. No plumbing tool can be used on a computer. Visualize going from a wrench to a flash drive and you will understand what I mean.
And now your friendly venture capitalist shows you how it looks from his vantage point. Prepare for Augmented Reality. I doubt if you would like to ride in a horse-drawn carriage on a eight-lane highway with cars and trucks speeding by. I wouldn’t and that’s what it would feel to me if I were to invest in these stale companies. It should feel awkward, it would be useless and it could be very dangerous.
Every company that rested on withered laurels is at risk of extinction in a post-Coronavirus world.
Departments and functions need re-thinking before re-engineering. You can actually get rid of departments altogether. They make no sense in the new cellular society. It’s feast or famine. The winners take it all. For the rest, there is no mercy. For a fact, that’s where the venture capitalists, and
the vulture funds, feast at the expense of the entrepreneur. Gaps and inefficiencies. But it serves the start-ups well and with them all the bandwagon of ivory towers self-proclaimed experts who kept peddling industrial revolution-age economic concepts way past their Best Before date. The fate of most start-ups resembles the fate of the turkey before Thanksgiving.
The turkey is fed more with every passing day and it sure thinks they keep it in high regard. Alas, the day that it is fed the most is the very day before it gets roasted. Just when start-ups are persuaded that they have got all the answers right with their run-of-the-mill decks paying only lip service to the challenging eco-system we inhabit, they realize that the questions have changed. But for most of them is too late. They are game.
I am a venture capitalist and I am ready to invest in start-ups and mature companies globally. Startups and companies that must prove capable of redefining their industry, producing a paradigm shift for their customers and stakeholders, yielding double-digit returns and being sustainable even in uncertain times because, simply put, in business there are no certain times. If I don’t, or decide I can’t, invest in your company, I am still ready to work with you at the drawing board and later assist you to
go to the market. The best time to secure a trusted investor with whom to go raise capital is now before everyone else wakes up and smells the coffee.
Giampaolo Parigi is a venture capitalist, troubleshooter coach, advisor, public speaker and published author. He is reachable on LinkedIn.