OpinionHow should startups and VC funds navigate their operations during times of conflict?
Opinion
How should startups and VC funds navigate their operations during times of conflict?
"In the wake of the events on October 7, startups' clients and venture capital funds persist in their operations within Israel, showcasing a steadfast belief in the industry's resilience. The more we substantiate our ability to steer through challenges, the more secure the industry's long-term success becomes," writes Yair Snir, Managing Partner at Dell Technologies Capital Israel and Europe.
The impact of the October 7 crisis continues to reverberate throughout Israel, especially in the high-tech sector, posing an unprecedented threat to business continuity for many
startups. However, these startups are not defenseless. It is crucial to recognize that we have weathered several years marked by extreme situations, beginning with the onset of Covid-19 in 2020, followed by the return to normalcy post-epidemic, and the global economic downturn since the first quarter of 2022, which intensified in Israel due to judicial overhaul. As a result, startups confront the current crisis with prior adaptation to extreme conditions, equipped with heightened alertness, efficiency, flexibility, focus, and a resolute determination to tackle such challenges. They have developed agile approaches, enabling swift adaptation to extreme circumstances.
1 View gallery
Yair Snir, Managing Partner at Dell Technologies Capital Israel and Europe.
(Photo: Dell Technologies Capital)
While the current test is more extensive, intricate, and significantly more challenging, the last six weeks have demonstrated that a thorough preparation of entrepreneurs can mitigate risks, rescue companies from crises, and enhance the survival prospects of each startup, setting the stage for growth.
This is also a crucial moment for venture capital funds, tasked with providing strategic guidance, support, and backing to their portfolio companies. Constructing effective and dynamic emergency plans tailored to each company's unique situation increases the likelihood of success.
A startup's action plan in the current state of emergency involves several key steps:
- Mapping Critical Processes: Identifying crucial processes within the organization at the product, R&D, marketing, and sales levels, and defining essential procedures, including ensuring timely payments to suppliers and employees.
- Strategic Prioritization: Rapidly prioritizing goals and tasks while allocating necessary resources—both personnel and funding. Dealing with personnel gaps due to reserve recruitment necessitates careful planning, determining backup and redundancy strategies, and clarifying responsibilities.
- Scenario Preparation: Anticipating and preparing for three main scenarios— a crisis lasting 2-3 months, a crisis lasting six months or more, and an escalation scenario (e.g., regional war). Each scenario requires adaptive strategies and comprehensive preparation.
- Communication: Effectively communicating the plan to all stakeholders—investors, customers, partners, and international employees. It is crucial to dispel any misinformation from the international press and social networks, providing comprehensive information about the startup's state, economic conditions, risks, prospects, and how the plan ensures business continuity, goal achievement, and future growth. The communication should remain business-operational, avoiding attempts to influence political positions. An orderly, precise, and detailed plan sends a powerful signal of well-managed events, reducing risks and instilling confidence in stakeholders.
- Adaptability: Maintaining vigilance and adapting the plan to rapidly changing situations. Crises are dynamic and unpredictable, and the ability to adjust strategies swiftly is essential.
In general, venture capital funds are continuing their activities in Israel, actively seeking investments, signifying confidence in the industry without grandiose statements. The same
trend is observed among startup clients and partners. Providing compelling evidence that our strategies are well-considered and firmly executed enhances the long-term success prospects for each startup and the industry as a whole.
The author is the Managing Partner at Dell Technologies Capital Israel and Europe.
