As fundraising gets harder, founders should ask investors for a flat round

With the economic downturn and associated uncertainty, startup founders have rushed to shore up their balance sheets.

At least two years of runway in the bank is recommended by me. That can be a tall order if you are in the process of raising money for a cause.

The founders of such companies are faced with a difficult decision: wait it out and hope the six to 18 months of runway they have can last them through a downturn or secure additional runway through a down or flat funding round.

Remember, if you don’t ask investors for support now, someone else in their portfolio will.

I lived and invested through the 2008 crisis, and I wanted to share the lessons I learned with you.

Even if you take a flat or down round, you need to secure the financing in order to be considered alive as a company.

Every founder is told to talk to their investors first about the company balance sheet and what they need to be confident that their company will survive the next few quarters. It is an important conversation to have and can be difficult to swallow.