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Thanks for the candid thoughts, Udo. Some brief comments on your response: - Unfortunately, we have some business-critical costs we incur, so can't do a full
by seaking 16y ago
Thanks for the candid thoughts, Udo.
Some brief comments on your response:
- Unfortunately, we have some business-critical costs we incur, so can't do a full slashing. However, we're confident that a couple key vendors that our business relies on will defer payment for a couple months, representing a 50% reduction to burn. We could probably also reduce general costs by 10-20% as well with some real belt-tightening.
- You're probably right about the revenue projections, but we do have our reasons to be optimistic. At minimum, some quick revenues will help make us that much more compelling to other investors if we chose to walk from this deal and throw a hail mary trying to land another investor in the 2 months we'd have to put a deal together.
- We're placing a lot of resources in quickly brokering a distribution deal with a marquee brand in our space. We're extremely confident that we will have something in place in the next two months if our progress thus far is any indication. Landing any of these deals would likely solve our immediate-term money woes, at least enough to stop the hemorrhage.
The question basically comes down to:
Do we take a deal on the table knowing that it will give us 10 months of certain life even though it doesn't feel right in the gut and doesn't even look that good on paper by most measures? Or do we roll the dice, go into bleed mode, and try and land something in the 60 days we'd have to do it (starting Monday), knowing that it's a horrible time of year to get anybody's attention?
Thanks again for the thoughtful response, Udo.
- Udo 16y agoYou should probably take what I write with a grain of salt, because I have seen so much stuff go wrong over the time, I tend to be overly cautious. My (admittedly somewhat unqualified) advice would be: - Go ahead and slash costs by as much as you can. And then some. If vendors simply defer payment instead of waiving/reducing it, things can get _very_ dangerous, so make sure you incorporate a limited liability company as a shield if you haven't already done so. And it wouldn't hurt to talk to some lawyers. - If your gut tells you not to partner up with this guy (and essentially give him your company in the process): don't do it! If it feels bad now, it will only get worse! Look for a real VC and/or possibly a bank deal. Maybe you can set up something with those partners who already operate in this space? - If you currently have no customers, maybe it's worth considering to hold off on buying these external services until you really need them. This may or may not be applicable to your situation, I don't know. But if the only reason for using these vendors right now is to give realistic demos and to have infrastructure in place just-in-case, it might be worth putting it on hold until you launch for real.