When will startups run out of cash?
When will startups run out of cash?
An analysis of the bank balance of 631 cash-burning starutps
For those of you that are long-time subscribers, you know that I don’t usually post Pilot content here, but I thought this one was worth making an exception for. You can also find a version of it on LinkedIn here.
Is all the doom-and-gloom about startups in 2024 warranted?
Looking at the data, the unfortunate answer is: yes.
In Pilot.com’s dataset, a full 57% of venture-backed startups have fewer than 18 months of runway remaining. The conventional wisdom on fundraising is that you need to start the process with at least six months of runway in the bank, meaning that well over half of these companies will need to fundraise by mid-2024.
On its own, that’s not necessarily a problem. In fact, it’s not dissimilar to what we’ve seen in previous years.
But venture investing has ground to a halt. No new capital is coming, and that puts startup founders in a very tough spot.
What can you do about it?
By the numbers, over half of you should be getting nervous right now. You have three options:
Raise more money: If your metrics are truly outstanding and more funding is available to you, you’re all set. But test this hypothesis ASAP, in case you're wrong.
Get super lean: Extend your runway by cutting costs as aggressively as you can—either until you’re profitable or have a credible path for profitability that is achievable within your remaining months of runway.
Find a soft landing: Use your remaining months of runway to either find a home for your team and technology, or shut down the company in an orderly way.
Are there other slices of data we should look at? Let me know.