A Very British Plan B: Go Bust?

Will your startup go up in smoke without a Plan B?

I’ve just finished reading “Angels, Dragons and Vultures” by Simon Acland.  Although the book is focussed on venture investments rather than the Angel investments that I am familiar with, I found it a useful and interesting read and much of the advice is wholly applicable to seed or angel stage companies – I would highly recommend it to anyone interested in investment in technology companies.

The author makes one assertion that sits less well with my experience of early stage companies, which is that there should always be a “Plan B”.  By this he means that a company should never depend for its continued existence on a things happening as planned, and should always plan for contingencies.  This might mean planning to scale back the size of the team if sales don’t come in as expected, or if investment is harder to raise than expected.  He rightly points out how easily expected cash inflows can slip, and that in the absence of a Plan B the management team can be trapped into taking investment on disastrous terms.

In many of the technology start-ups where I have had been closely involved, there has been no Plan B.  There have, on occasion, been points in the history of the company where without a sale coming in, or if an investment round fails, the company is doomed.

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Unlocking Sales to Giants

For many of the technology start-ups I have worked in, corporate giants appear to be the natural first targets as customers, but is this really the right strategy?  Is the effort involved in unlocking these sales worthwhile?

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