As COVID-19 tests everyone in extreme ways, early-stage founders face unique challenges. What will the future of fundraising look like? CB Insights reports that seed-stage funding is projected to decline 22% in Q1 2020 compared to Q4 2019 and projects a steeper decline in Q2. Many founders wonder how this will impact their plans to raise which affects all other decisions. What can you do to build resilience for yourself and your team in deeply uncertain times? In the short-term, how can you build a sense of community and cohesion among a newly-formed team while working remotely?
We connected with entrepreneurs of all stages to see how COVID-19 is affecting their ventures. In a series of posts, we share their unique insights which might help you weather this storm or feel more connected in a time when many feel cut off. Here, Sanchali Pal, Co-Founder and CEO of Joro, shares how COVID-19 affected her team, business development, product plans, and even future fundraising. Pal’s startup Joro offers a technology platform that enables users to track and improve their carbon footprints on their smartphones. They expected to do a widespread product launch in April 2020. A full transcript appears below the video.
How has COVID-19 impacted Joro on a macro level—has it influenced major decisions?
Sanchali Pal: On the business side, the one major change that we’ve made is we were planning to do a public announcement of the product and the company in our funding in two weeks, and we’ve decided to postpone that announcement. Instead, we’re moving forward with a product launch—a soft launch—and holding off on any sort of public announcement until people have a little bit more mind space to think about climate after we’ve dealt with the worst of coronavirus.
It really has the most effect for us because the public announcement would have helped us with potentially hiring because we could announce our funding in the product. It could have helped us with certainly user growth that we want to show before we go out to raise money. And we do want to raise funding in the next couple of months.
How will the economic downturn affect your fundraising plans?
Sanchali Pal: We’re going to be raising a seed round. I looked at some CV Insights estimates, it should be down 30% to 50%. Especially Q2 is probably going to be the worst time to raise, but we’ll probably go out to raise in Q2 anyway. I do think that we’re in a better position than many companies because we’re not a gig economy company. We’re working on a sustainable trend literally in the market that’s here to stay. And if anything, I think hopefully this crisis will show us the power of collective action and that collective action is effective when dealing with really big crises, like coronavirus or the climate crisis. On the other hand, I think certainly I expect valuations to be lower and probably smaller funds to be doing fewer investments than previously.
What about on a micro-level? How has being on lockdown disrupted day-to-day operations?
Sanchali Pal: Well, we’re lucky that we’re an app-based company, so we’re building software. We can work remotely. So the first big change is that we’ve shifted from working primarily in-person in our office to working remotely. We were set up definitely to work remotely before because we had advisors and people we work with occasionally on a weekly basis who are in other cities. So we work with people in Switzerland, Singapore and Denver on a weekly basis. So we had the infrastructure for Hangouts and Slack and Zoom and all the things that we use now for remote work, but it’s definitely been a transition to have the four or five of us who are in-person in the office to now be remote.
I think we lost a little bit of productivity, probably everyone just with the stress and the transition with the few days of trying to figure out how we were all going to manage this. We also hired a head of engineering last week, so last Monday was his first day. So we’ve been trying to figure out remote onboarding for him. Luckily, he’s a more experienced hire. He’s the most experienced person on our team. So he has a lot of experience doing remote work as well and onboarding new people. So that’s been helpful. If anything, I think we’ve found that we’re much more productive at home than we thought we would be.
What are some of the biggest challenges to having a recently-established, still growing team working remotely?
Sanchali Pal: The things that we’ve been trying to find space for are the more social interactions and the team bonding, especially with the new member of the team. We also had another person join just four weeks ago, so four or five weeks ago. So we do have a couple of really new members of the team and no one’s been on the team for more than eight months because we’re still so small. So definitely finding those moments that we would have usually had lunch in the office or gone and grabbed a coffee or walked around. So we’re trying to recreate that with a few weekly breaks.
We have a lunch today, we have a meditation and mindfulness session tomorrow, and we have a coffee break on Mondays and we have other interactions. The first day of lockdown was actually our software developer’s birthday and we were planning a birthday party for him. So we did a virtual happy hour. And we have a book club, so we’ll still be meeting virtually for our book club. So those are the types of things that I think have been harder for sure, being remote.
How do you build team cohesion and community online? What do you do to make online social interactions meaningful instead of awkward?
Sanchali Pal: I’ve been trying to keep in mind everyone’s different situations. So our newest hire has children and that makes his work from home a little bit different. One of our teammates just moved apartments last week. So I’m trying to keep mindful of what’s going on in everyone’s lives. Initially, we were using Hangouts Meet because we were using a free product before this. We switched to Zoom because Gallery View is really helpful for being able to have a communal discussion, but they’re really informal. We just schedule them on the calendar and everyone meets, brings their own lunch and chats. We so far haven’t done any sort of specific discussion points except for the meditation mindfulness session.
Can you tell us more about the online meditation sessions and other creative ways to interact online?
Sanchali Pal: One of our teammates brought that idea from a previous company she worked at. And she actually plays the audio recording of a meditation. We turn off our video and go through it together. And then at the end, reflect on it. And that’s been a really nice way of having some sort of structured interaction.
My husband is also working from home. And so one of the things we’ve done is turned our balcony into a conference room. And because we only have a one-bedroom apartment, so trying to figure out how we use space. But I’ve been listening in on his team lunches and one thing they’ve done is they had a pet show and tell at lunch, and then they also did a Jeopardy!, Coronavirus Jeopardy!, which I think is a fun idea. So maybe we’ll start playing games as well.
Finding balance while working remotely can be tricky for founders especially—it’s hard to not work 24/7. What’s your approach?
Sanchali Pal: I think that overall, we’ve kept our work style very similar to before and that’s actually been helpful to have some semblance of a structured schedule. I walk to work, usually. I have a 15-minute walk to work, which is really nice. So I’ve missed a little bit of the morning and evening bookends to my work. So I’ve tried to recreate that a little bit by working out in the morning and trying to go for a run or a walk. And then ideally, what I would love to do is end my day with a walk as well, so that I just have that mental feeling of ending the day. Certainly, with both my husband and I working from home, it’s easy for it to end up being eight o’clock and not realize that we were still working and we didn’t necessarily have to. We just didn’t stop.
What is your role as CEO in helping your team maintain productivity while being remote yet acknowledging the pervasive stress and uncertainty in our world?
Sanchali Pal: There’s a little bit of ambient stress—a lot of ambient stress!—for everyone that is important to acknowledge. I think we went through the first week trying to just pretend everything was going to be normal. And the second week, we’re sort of acknowledging that it’s not the same and got to have some deeper conversations with people on my team about how they were really feeling even if, on the surface, everything was okay. There’s a lot to take in about the environment.
I’m very aware that three people on my team have just moved to the Bay Area and don’t really know anyone here. And one of them, the one who moved into her new apartment, moved in with a stranger. So she doesn’t know, she’s quarantined with someone she doesn’t know at all. Now, interestingly is that she moved into my building. So we can go on walks together sometimes, which is nice.
How is your team adapting to the changes?
Sanchali Pal: In general, I think we’ve kept a similar work style. We’re trying to find ways to create boundaries between work and life, even though we’re in the same space and acknowledging that everything is not exactly the same.
It’s disappointing to have to push our launch back because we’re ready and we will be. But it also, I think, helped a little bit to release a little bit of the pressure on the team as we were all working towards this deadline for the last six months. And to know that it’s going to be fine no matter what, I think it has helped a little bit, really some stress that would have been there otherwise.
What helpful advice have you heard that could benefit other early-stage founder-CEOs?
Sanchali Pal: One of the best pieces of advice I’ve gotten in the last couple of weeks was one of my investors who reassured me, our lead investor who said, “In 2008, I’ve been through something like this before and we made it through.” So those stories of resilience, I think, really helped. That can be true at the company, knowing that we’ve been through hard times in the past and this is only one more of those. Actually, many of the things we’ve gone through in the past probably were more difficult for the company than even this situation.
But he was basically like, “A lot of these big companies, Dropbox, Stripe, the successes of today were built in 2008, 2009. And there is always a market for good products and good ideas. You can think about the positive side of this as there might be less competition. There might be fewer companies trying to enter your space and fewer companies getting funded entering your space. And you also have the freedom to hunker down and focus on building something that your customers really want and holding yourself to a higher standard of that. And that’s why a lot of the best companies were built in 2008, 2009, and the ones that are still around today.”
How can founders maintain some positive perspective about the future of their startups?
Sanchali Pal: I thought that was a really great perspective and helps me acknowledge that I feel confident that, if you feel confident that what you’re working on is a fundamentally valuable service and one that—and just by luck, hopefully, is not totally radically changed by the presence of this virus over the next 18 months—then I think there is a lot of reason to believe that you should continue with your path.
And hopefully, you’ll emerge on the other side with a stronger business and maybe a stronger team because maybe you’ll have a better chance at attracting talent in the next 18 months than we would otherwise in our really hot job market. For an early-stage startup like us, those are some of the real benefits. We don’t have to worry about revenue right now. We have the advantage of being able to focus on the product and maybe make those few key hires to build out the core team.
What about your customers? How are you staying connected?
Sanchali Pal: We’re actually putting out a blog and newsletter today that touches on Coronavirus and it tries to unpack a little bit of the effects on climate for people who may be interested. And then also, we put together a climate reading list for people who are looking for content while they’re in quarantine. Reading, watching and listening list. So this is sort of going to be our first attempt at sharing something with our users that’s more related to the current situation we’re in. But I think the other thing we’ve been trying to do is just be mindful of the fact that people have something else that’s their priority right now and not trying to jump in and take over.
Founders face intense pressure in the economic certainty that might be with us for a while. Are you doing anything that you find particularly beneficial that you’d recommend to other founders?
Sanchali Pal: And the other thing that’s been really helpful for me is our investors created a founder support group for us for managing Coronavirus. And they’ve put us together in a group with seven or eight companies who are all at different stages. So there’s a few seed stage, a few A, a few B, and it’s really nice to know that I have that group to chat with because it’s hard to gauge sometimes how much and what to share with every member of our team. So I definitely say founders should reach out to each other and this project is a great way to share lessons, too. So thank you.
Resources for Online Meditations Useful for Teams
Headspace created an Employer Toolkit—a free collection of resources to help you guide and support your team through the stress and anxiety of the current global crisis. It contains resources on managing anxiety with a collection of short guided meditations (3 – 10 min.) and exercises specifically designed to help employees manage stress, anxiety, and uncertainty through mindfulness. It also provides free access to meditations designed geared from sleep, focus, parenting, and loneliness.
Insight Timer publishes the world’s largest collection of free guided meditations. Its free library offers a broad selection of 30,000 short guided meditations on managing stress and anxiety and improving sleep. Pal’s team at Joro uses Insight Timer.
Balance app is a unique personalized meditation audio program. Each time you use the app, you answer questions about your meditation experience, goals, and challenges. Based on your answers, the app suggests which meditations would be most useful that day. Balance is offering free subscriptions for a year because of COVID19. Email firstname.lastname@example.org for instructions—and please share with others who might benefit.
Projections for Fundraising
In “Startup Funding Dwindles Due to Coronavirus Slowdown,” the Wall Street Journal reviews the long-term implications of COVID-19’s influence on fundraising and the startup ecosystem. By the end of March 2020, it reports that capital from seed-stage funding declined by about 22% globally since January. Total private-market funding for startups was $67 billion in Q1, down from an initial forecast of $77 billion the previous week. This affects not only the survival of early-stage startups but the growth of larger corporations who use early-stage startups as a source of emerging technology and skilled workers. Without funding options many early-stage startups could fail “before catching the eye of corporate buyers, leaving a critical gap in the technology development ecosystem.”
In “COVID-19 Is Dragging Down Corporate Venture Capital Investment,” a brief created by CB Insights on April 1, 2020, in the first quarter of 2020, global CVC-backed funding fell to $34B—a 13% drop compared to Q4’19. The number of VC-backed deals declined 19% during the same period—a 24% decline compared to Q1 of 2019.
In “How COVID-19 Could Impact Startup Funding,” a brief created by CB Insights in late March 2020, projects the decline in Q1 2020 “will be the second steepest quarterly decline in the past ten years, second only to a 36% decline in Q3’12.” Projections are most dramatic in Asia where private market funding is expected to fall 35% from Q1’20, compared to Q4’19.