Don’t Panic! Corona Virus Impact Tips for Cyber Startups


The Corona Virus presents cybersecurity startups with a variety of tough problems and real opportunities. On one hand, you have to run and grow your business while working from home and facing a challenging time. On the other hand, cybersecurity is now more important than it ever was. I asked nine different venture capital investors for the advice they are currently sharing with their portfolio cyber companies.
Build Group 

Gray Hall, a BuildGroup managing director and co-investor at Cybrary shared a post from his firm’s blog titled “How to Manage Your Business During the Coronavirus Crisis”. The main points of the blog were:

  • As an entrepreneur and business leader, your first responsibility is to keep your team safe and healthy.
  • You also need to take care of your business.
  • If you are profitable, you want to stay profitable. If you are burning, you want to cut your burn to give yourself more runway.
  • Don’t panic, but take the opportunity as a mandate to build your business into something leaner and more resilient!

The blog has lots of very good suggestions for analyzing your org chart, looking for ways to lower your costs and leveraging your entire product line for more effect.

Data Tribe

Mike Janke, Co-Founder of Data Tribe with portfolio companies including Dragos, Enveil and ReFirm Labs and former Navy Seal writes:

Economic downturns and Black Swan events are nothing new. If you have been an entrepreneur long enough, you have already experienced several of these global events due to a multitude of causes (9/11, mortgage crisis, war, internet bubble crash, etc., etc.). Yes, this event is unprecedented in our time, however the impact can be judged based on past history. Every cyber startup is different. Preparing your company, employees and investors to weather the storm is critical. You have multiple levers to pull that allow you longer runway, less burn and more time to survive. None of them pleasant, but all of them necessary. How quickly you and your team act will determine your ability to weather this crisis. Many startups will fail regardless. Financial options include cutting headcount, reducing salaries, chopping non-essential costs and taking a bridge note to extend runway.  The great unknown is for how long. In spite of what every “expert” wants to opine about, no one really knows for certain. Don’t count on closing an investment round anytime soon - take action instead.

What we can surmise is how we market and sell our products is drastically changing and will be the “new normal” for a long time to come. Some cyber security startups have “heavy touch complex products” that require multiple face-to-face meetings and install, while others are cloud-based, light-touch and do not require intensive face-to-face sales motion. Many startups have multiple products (intelligence feed, software product and some incident response or threat hunting services) that they offer to customers. Your startup falls in one of these categories. Focus your energy and efforts on selling the product that can be bought remotely and is light touch.  If your startup falls in the “heavy touch, somewhat complex product” category - you must find ways to adapt. Is there a lighter version of your product you can offer? Can you adapt your product demo’s and install to fit the “remote work” environment? Many of the heavy-touch and complex products will not survive. If your product has a long sales cycle with multiple face-to-face meetings and a required install and training time - your chances of survival go down drastically. This is the new norm.

VC’s have lots of money and will invest, however very slowly and with heavy discounts on valuation. If your startup doesn’t have the “usual metrics” required for an A, B or C series round of investment, you need to find alternative capital (bridges, notes, existing investors) to give you the runway to survive. Now is not the time to go out and raise if your startup is lacking the needed revenue, pipeline, growth and traction needed for venture rounds. Seed rounds will also be impacted as Angel investors are holding onto capital in these uncertain times. There is light at the end of the tunnel and this economic downturn will end -they always do. The unknown is “how long” so don’t panic and do what you can and must to extend runway.

ForgePoint Capital

Ernie Bio, ForgePoint Capital investor, former Defense Innovation Unit Chief Operating Officer and former F-16 Pilot writes:

At ForgePoint Capital we’ve spoken individually with all our portfolio companies to ensure they are prepared to weather the uncertainties of the economic turmoil that is unfolding. The key word here is “uncertainty” – NO experts truly understand how this will eventually play out.

That being said, any seasoned entrepreneur who has lived through multiple economic collapses will emphasize the importance of adjusting quickly and incrementally to market changes; over-corrections could exacerbate things. For startups that are B2B and have recurring revenue models, there is some initial protection that is not afforded to their B2C counterparts. I recently spoke to my sister who runs global software procurement for a F100 company, and she said they have not adjusted their budgets nor slowed procurement down; they also believe cybersecurity spending will go up in the short-term. As time goes on, however, purchasing decision and budgets will be affected, even for the most cash rich enterprises – it changes by the day and it’s already
happening, so brace for impact.

From a startup perspective, whether you just raised an A round or are more mature, there are several things you need to do, yesterday. The keys to success are adjusting quickly and incrementally, and then having the execution discipline to stick to the plan.

Here are some things to consider as a startup CEO/founder/executive:

  • Adjust (down) your forecast for new bookings for Q1 through Q4. Q1 will hopefully be minimal (10-15%), with Q2 – Q4 seeing 25-50% decreases
  • Decrease discretionary spending and suspend non-critical new hires
  • Shift event spending to digital marketing efforts
  • Look to increase cash runway by up to six months. If you’re in a healthy cash position, the best time to obtain debt is when you don’t need it . . .
  • Model multiple worst-case scenarios so you don’t exceed the worst-case burn scenario
  • Take advantage of the time from an R&D perspective to add delayed product features and/or re-prioritize your roadmap
  • Share notes with fellow portfolio companies on market intel and perhaps team-up to do webinars
  • Watch your business metrics very closely and continue to adjust as you get better data and visibility – the economic conditions = moving target

Lastly, share your assumptions and revisions with your Board / investors immediately - transparency is critical. Remember, many great companies have been started and/or built during adverse economic times - surviving a recession makes the good times way more manageable. 

Gula Tech Adventures

Cyndi Gula, co-founder at Gula Tech Adventures with investments in companies like Huntress, Inky and Bandura, and former VP of Operations at Tenable Network Security writes:

The uncertainty of the COVID19 crisis is going to be a reality for some time. It will likely completely change the way business is done into the future. As the outside world slows down, it might be time to take advantage of self-reflection and correction on the way to financial stability.

Leaders should be the example

Leaders should be demonstrating the behavior they expect from their employees. The safety and health of the community is paramount, and you should offer help in whatever way makes sense and support your employees’ efforts who are doing the same. Communication and understanding are key at all levels and on a variety of subjects. It will also help establish trust in your leadership as the company comes out of this situation.

Don’t hibernate, innovate

Young companies tend to move so fast to keep up with demand that things are done just because that is the way it has always been done. Is there a better way, especially if it enables or improves working remotely? Perhaps rewrite that clunky interface, reflect on processes and procedures for efficiency – or simply take the time to document them completely. This is a perfect time to access if it still makes sense to do things the same way.

Don’t forget the lessons you are learning

It might be easy to look at this time as just surviving the crisis. Take the time to learn as you are experiencing these times as there is likely going to be another one in the future. Do you really have the company you want or the one you grew into? If you have to cut costs, what made the most impact and what could you have done better. How did those cuts enable your success and nimbleness into the future? Even if you are not slowing down, not impacted by WFH, not impacted by being sick or know anyone directly who has, this is an important time in history and a good time to learn about yourself and others.

These are unprecedented times, but this too will pass and hopefully we will reflect on the positive direction we have all moved through this crisis and be better prepared for the next one.

Inner Loop Capital

Justin Label, Inner Loop Capital founder and former partner at Bessemer Venture Partners reached out to each of his portfolio investments (which includes companies like NS8, DNS Filter, AppOmni, Cybrary and Scythe) with the email below. This is a great example of the kind of proactive engagement you can get from an investor and I appreciate Justin for sharing this very personal example. Justin writes:

First, I hope each of you, everyone in the company, and everyone in your immediate families and circles is staying healthy during this unsettling outbreak. I view it as inevitable that each of us will have family and close friends (or will ourselves be) affected by the current pandemic. Certainly, our primary goal has to be to minimize and delay the spread in our circles and in the greater community.

Second, I want to make sure to be in touch as a partner to you in this uncertain time. While I am realistic about the short- and medium-term disruptions, Inner Loop is staying focused on its long-term goal of supporting great founders in the D.C. region and beyond. I want to make sure you know you can reach out if I can be a sounding board or helpful in any other way over the coming weeks, months and beyond.

Third, I am curious to hear — when you have time, without creating new work — what needs, obstacles and opportunities the business has at this time. My perspective is that we are not facing a disruption of a few weeks. Rather, our daily lives may well be impacted for 18 months or more. I do not know what form that will take, but I believe a mix of social distancing, work from home, Zoom meetings, repeated testing, occasional quarantine, and increased interaction with the health system is on the menu for all of us well into 2021.

Our personal lives, work lives, and health lives are changing in unforeseen and unforeseeable ways. This will create new needs and demands. Among these will be more tech, more cloud, more security, more distance learning, more virtual interactions, more online and ad-hoc delivery of goods and services of all kinds. Most Inner Loop portfolio companies play an essential role in several of these needs. Stepping up to the plate on these needs is a social responsibility as much as it is a business opportunity, and I do not think we need to be shy about that.

I will be interested to hear how you are thinking about these short- and long-term needs, and happy to play whatever role I can to help. In my view, the right tone to strike now is five fold:

  1. Every message leads with a wish of good health for everyone involved, and an offer to help relieve critical needs however we can. Of course, this includes direct health, but also mental health, social support, and logistical help, as employees and partners deal (and sometimes struggle) with caring for the health of themselves and others, transitions to work-from-home, childcare, and other disruptions.
  2. Keep yourselves and your team focused on the long-term mission of the company. 
  3. Be honest (as appropriate for each audience) about the general and specific challenges facing the company in the near-term. Some companies will have thin balance sheets or have financings disrupted. All companies should be re-planning P&Ls and Balance Sheets for an uncertain financial future. Having lived through two major dislocations in the last twenty years, I can assure you that transparency and conservative forecasting are appreciated by all constituents. Employees and partners will see through any other approach.
  4. Look for ways that the business can help out your partners or the broader society through the things you are uniquely good at. To me this is the analogue of The Times and The Post making coronavirus coverage free for the time being. What short-term offers or business model changes can each company do to contribute in its special way to helping us all get through this?
  5. How does the business evolve differently long-term to meet these new challenges and opportunities? How can you begin to orient the business around that?

To re-iterate: I hope all of you are well, on every possible level. I am honored to be your shareholder and partner. Please let me know how I can be involved in these challenging times, and always.

StoneMill Ventures

Michael Sutton, founder of StoneMill Ventures, investor and advisor in companies including GreyNoise Intelligence, RackTop and former CISO of Zscaler writes:

There are moments where everything is put in perspective and we’re currently experiencing one of them. While there are critical business decisions to be made, every company should first and foremost be asking themselves what they can do to assist. Perhaps you offer a product or service that would be of benefit to the many individuals that are working to keep us all safe. Alternately, consider redirecting human or capital resources to one of the many volunteer organizations focused on combating this crisis. Regardless, you should be thinking about what you can do to keep your employees and their families safe. Everything else is secondary. 

Every startup should be making contingency plans, no matter how confident you are that you can ride this crisis out. Assume the worst and hope for the best. Throw out your past assumptions on your burn rate and adjust them to assume no new sales and delayed or cancelled payments on past sales. Determine the worst-case scenario for your current runway and ask yourself what can be done to extend it. Consider cutting all non-essential expenditures and reduced/deferred salaries. Reassess your supply chain and identify alternative sources for critical inventory. Most importantly, ensure that tasks performed by key personnel will not cause disruption if those individuals need to work remotely or are unavailable for an indefinite period of time. 

New capital is likely to remain scarce until we see a light at the end of the tunnel. Companies with less than six months of capital remaining are especially vulnerable. It’s not an ideal time to be starting the fundraising process but there are options. Look to existing shareholders if fundraising is necessary but expect the terms to be less favorable than they would have been just a few weeks ago. The federal government is also working to make Small Business Administration Disaster Loans ( available, which may provide a much needed lifeline to startups. This is however a fluid situation and it’s not yet clear what assistance will be available and which companies will qualify. 

Strategic Cyber Ventures

Hank Thomas, CEO at Strategic Cyber Ventures, with investments in Polarity, TrapX and ID Data Web, writes:

Heading into any uncertain times you need to have multiple courses of action at your disposal that you’ve bounced off of others that you trust. Don’t live in a vacuum in these times of self-isolation, syndicate decision making as much as possible to allow others to remain involved and to make better decisions. Decision point tactics are the best way to prepare. Identify what you think those decision points will be in advance and be prepared to develop branches to your courses of action when nothing seems to be going as you thought they would, since they probably won’t. Like Mike Tyson said, “everyone has a plan until they get punched in the mouth”, and we were all punched in the mouth a few weeks ago. Prepare for more punches!  
To emerge from the other side of a crisis it is important to do everything to keep your entire team together. You will need both your rock stars and your everyday performers when things bounce back to normal. Keep up morale with virtual team events, even if it is just some time to see each other’s faces and crack a few jokes. A start up I am very close to took a holiday this past Friday for everyone to virtually play the newly released version of the Animal Crossing video game. It was a big hit!
And last but not least, take this time to focus on the part of your team dedicated to customer retention and satisfaction, which should include everyone. Your customers also got punched in the face, so don’t overwhelm them with requests to help or meet to discuss the crisis. There is plenty to do in house to prepare your team to win when your customers come calling with requests during the remainder of this crisis and beyond.

Tech Operators 

Daniel Ingevaldson, Vice President at Tech Operators, co-founder Endgame and former Director of X-Force R&D writes on multiple topics:

WFH efficiencies
Some VCs say that they prefer companies with an “office culture” as opposed to heavily or fully distributed teams. What they really means is that VCs prefer teams that communicate well and move quickly. If we had to choose to invest in one of two identical startups, we would always pick the one that we thought was more nimble, fast-moving and reactive to change. Keep this in mind as you consider long-term effects of COVID19 and adapting WFH expectations from your growing team.
Cash management and operating model sensitivity testing
The operating model is your roadmap for navigating any shock or full-blown economic crisis. A well-designed operating model is based upon a set of sales and budget assumptions that become more precise over time. It should be updated frequently, in a Bayesian sense, to become more accurate as more data is integrated into its assumptions. Nothing blows up an operating model faster than an economic shock, but your model is still the best tool to guide you through.

Conduct a sensitivity analysis using your model to stress test your assumptions with various levels of new bookings reduction and increased churn.

  • What happens if new bookings next month are down 25%?
  • What happens if churn immediately triples?
  • What does this mean for cash and runway?

Use your findings to identify which areas of spend become less efficient and are subject to cuts. Communicate your findings to your board and work with them to find the most cash-efficient path forward. 
Nice to have vs. Need to have
Things were going so well in the new year. Pipeline was growing, your pitch was resonating, and you can’t remember your last bad meeting. Your metrics were looking good, plenty of cash in the bank and your investors were happy. Now it’s the end of March and none of your prospects are returning calls or emails. Your bottom of the funnel deals are stuck in the mud and your top of funnel prospects are no-showing you for demos. You have just discovered that you just got friendzoned into the “nice to have” bucket. 
This can be a blessing. Use this as an opportunity to test and revise all of your assumptions. Product-market fit is a moment in time and shocks can turn everything upside-down in an instant. Ask the hard questions. Why were we hot sh*t last week, but now no one calls us back? What are my customers top 3 priorities? If we’re number 10, we might as well by number 50—how do you break back into the top 3? Use the crisis to forge a company that is more focused on your customer’s authentic demand. 


Jonathan Lehr, co-founder of Work-Bench, founder of the New York Enterprise Technology Meetup and former Morgan Stanley associate focused on technology wrote an extensive blog titled “Enterprise Startups: How to Weather the Storm”. I was very glad to be able to share highlights from this post because Work-Bench is based in New York City and has a concentration of Corona Virus instances.

The main points from Jonathan’s blog are:

There are many parallels between the Corona impact and the financial crisis of 2008. After IT budgets got slashed in the financial crisis, commercial activity with enterprise startups actually increased in order to support the efficiencies and new capabilities that Fortune 500 companies required.

It was the legacy vendors like IBM, Cisco, and EMC who had bloated, multi-million dollar contracts and weaker capabilities who were hit the hardest.

In 2020, startups navigating selling into the Fortune 500 amidst the Corona virus should listen carefully to their customers, make their product deployment as easy as possible, focus on features that make their customers more productive, and when possible – over-deliver on your promises.


I’d like to thank each of the contributors or sharing their takes on customer engagement, making tough decisions about running a cyber start-up and most of all – not to panic during this time.