OurCrowd Will Keep Business as Usual as Long as We Are Allowed, Says CEO
Serial entrepreneur Jon Medved spoke to CTech about investing at a time of economic crisis
In its attempt to curb the coronavirus (Covid-19), the Israeli government on Saturday night announced a ban on gatherings of more than 10 people and a forced shut down of all nonessential businesses, grinding the economy to a temporary halt.
“As long as we are allowed by the rules, we want to maintain an operating business as usual,” Medved told Calcalist in a phone interview Sunday. “We are responsible for the health and well-being of hundreds of startups and we have a huge portfolio of companies. At the moment we are very busy working with them, making sure that they are doing well, and that they are keeping their businesses open and helping them to continue to raise money in these difficult times.”
Like most other local organizations, OurCrowd has transitioned to a model of working mostly from home. “We are limiting our face to face meetings to less than 10 people,” Medved said. “Our office is big so there is a lot of distance between people and it is well ventilated, not to mention we are cleaning it constantly.”
According to Medved, some two dozen companies on OurCrowd’s portfolio develop technologies that pertain directly to the corona crisis, from a company developing remote patient monitoring technologies to a company creating new kinds of disinfectants.
“We have an unbelievable amount of work cut out for us, as we have to keep communicating not only with these companies, but with more than 40,000 investors who want to know what is going on and are concerned about the situation,” Medved said.
On Sunday, Medved took the time to answer CTech’s coronavirus questionnaire:
How is your organization addressing the recent government directives?
1- By making sure we don't have congregations of more than 10 people
2- By encouraging most of our staff to work from home
3- By being active and supporting companies that are trying to fight back
As soon as the prime minister gave his newest instructions, at 10:00 pm on Saturday, we had a staff meeting with our senior management using Zoom video. We were 25 individuals in a virtual conference room.
It is critical for everybody to keep their company moving as the danger is not only medical. It is a societal danger that could put a stop to the economy. We all have to do our part whether you work in a factory producing toilet paper or you are working with startups trying to fight the virus. We are actually hunting new investments as we speak. We are looking at companies that do vaccines, companies that do therapeutics, etc... We are interested in the issue of social distancing, like working from home and distance education, which is going to require companies to supply new software and products for that.
In what ways do you expect the corona crisis to impact your organization in the coming months?
I think the crisis provides threats and opportunities at the same time. It is a very complicated time to be raising money, but on the other hand raising money is more important than ever before. The first opportunity resides in the fact that the money you raise and invest becomes really critical and important.
The second opportunity we have is to become very active in fighting the virus and providing solutions of all kinds for society, government, and people on how to handle this reality.
On the other hand, not every company can do that. If your company is busy working on autonomous driving for example, it is hard to see how this has an immediate impact on the crisis and it is difficult to talk to investors on why they should invest today in autonomous driving when they are worried about corona.
But this is a part of life, you have to figure out ways to make sure your spending is under control, that you have a lot of cash to weather the storm. This will end. This is not an eternal crisis, it is a crisis of limited duration, the problem is we simply don't know for how long.
What can be done to minimize the damage?
I think you have to communicate more effectively than before with your own teams. We are writing memos to CEOs and investors, doing webinars and video calls constantly, especially because we have more restrictions on face to face contact. We had to cancel a breakfast we've had for the past six years every Passover with 300 people. But we will have a video conference instead where we will do the same thing but online.
When somebody from abroad cancels a meeting due to corona restrictions,, the typical response is along the lines of “too bad, we will see you after the crisis,” which effectively ends the interaction. This is wrong. The right response is to set up a video conference at the same exact time you were supposed to have this meeting and work as best you can without the face to face contact. This requires you to step out of your comfort zone, and it takes more preparation, but it will potentially save your business.
What are the top three rules to follow to endure the crisis?
Be financially responsible. Cut your burn rate and the amount you spend in the company. Make sure your costs are under control and are in line with current realities so that you can have adequate cash reserves. It is going to be very difficult to raise money in the near future and the easiest money you can raise is money you save on a day to day basis. People are already saving money on travel costs and corporate parties.
If you have the ability to cut spending in such a way that you have one to two years of cash that is very useful. If you have less than one year of cash, figure out a way to stretch the money for at least a year or raise some more money quickly if you can. Some companies say they will raise money six months from now, which is a huge mistake. They need to raise money today.
Get closer to your customers than ever before. Customers are enduring the same pain that you are and you need to understand their pain and how you can help. Figure out how your customer-supplier relationship needs to evolve in order to make your customers happy and allow them to continue to give you business.
If people are working from home, use this time to plan and do creative work. If you are forced to spend more time with your kids and your wife, turn it into an advantage, it is not a curse. Figure out a way to get to know them better. Be creative with work, make sure you are not fragmented and that you are connected through the tools and technologies we have. The key thing is to survive and come back at the other end of this mess.
Do you believe the coronavirus pandemic will have a lasting impact on social, economic, and cultural norms?
Social distancing was already happening, a lot of people were already working from home, but this will accelerate those trends for sure. The crisis is not going to disappear. Researchers and analysis indicate corona could come back, even if it becomes under control.
What are your top 3 pieces of advice to your portfolio companies at this time?
1- Work harder than ever before.
2- If you are a CEO or a manager this is the time to lead. Do not be scared, get yourself out there and prove that you are a leader.
3- Focus on your business, make sure you have sufficient financial resources, support your customers and find new customers if you can.