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Lack of VC funding forces startups to think lean

Sarah K. White | July 13, 2016
A steady drop in venture capitalist funding has forced startups to develop new strategies to evolve their workforce -- that includes layoffs, budget cuts and a new definition of growth.

And be transparent with your internal employees as well -- don't let them feel you are hiding anything about the business from them. Stevenson suggests when enacting new policies -- like a salary cap -- that you formally announce each initiative and acknowledge the disadvantages, as well as the advantages.

Redefine growth

The best thing you can do in the current funding climate is to temper your expectations and redefine how you perceive growth, says Stevenson. If your business is focused on growing the business through hiring -- it might be time to take a step back and reconsider how you value growth.

"Many executives hold a new viewpoint and are not equating growth with how many people they have hired; it is currently a broken metric in this market. Savvy companies should focus on a fresh benchmark for growth -- business objectives, user acquisition and retention," says Stevenson.

And don't hide these new growth expectations from your employees, he says. It goes back to remaining transparent, he says, companies often make the mistake of waiting to tell employees about vital business changes, and it's usually too little too late. Instead, keep them informed throughout the process -- that way, you'll be left with employees who remained by choice, and are therefore prepared for the realities your company will face.

"A company may have to downsize, adjust goals -- and the leaders and the employees will need to be willing to compromise. As a leader, you need to be front and center -- hold daily stand-ups, quarterly meetings -- and be leading the charge with this new information and change of direction," he says.


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