On the heels of the second largest bank failure in U.S. history, startup founders are managing communication through media professionals, laying off employees while ensuring they have enough cash and insurance to weather an expected recession.
Embroker ‘s newly released 2023 Risk Index Report, revealed 84% of startup founders reported an impact due to the closure of Silicon Valley Bank.
The report involved a survey of more than 500 VC-backed startup founders in March 2023 and examines the risks startup founders face after SVB’s collapse and their plans to mitigate them.
Retaining capital was the founders’ first objective after the closure.
In addition, founders recognized the importance of communicating the impact and their response to stakeholders. Nearly half of founders (46%) engaged with a public relations agency or professional to manage their messaging.
According to the data, new risks such as inflation, Human Resources’ changing landscape along with societal issues and movements vary considerably from those in 2022.
People are at the core of the perceived biggest risks in 2023:
- 30% of founders are struggling with remote workers
- 25% are struggling with hiring
- 24% are struggling with social issues and movements against them
Product and business growth were the two main goals founders reported for 2023. More than a third (34%) identified these as their key success metrics.
Founders will give up their time and money to achieve this, with 37% reporting a willingness to set aside their original vision and give up their own cash if it meant success.
Founders are steadfast; however, to do anything that would jeopardize their reputation. A leading factor founders refuse to sacrifice this year, at 35%.
Year-over-year, founders also appear to have a stronger sense of self; 33% of founders report they are unwilling to sacrifice personal relationships, showing a large increase from 24% in 2022.
Internally, 25% of founders have struggled with hiring in 2023, and 30% reported struggling with remote workers. Deploying human resource (HR) programs seems to be the answer, as 30% of founders reported this to be a leading solution.
“Issues surrounding social movements” that either directly or indirectly target them or their business was a new top risk added to this year’s index. More startups are choosing to engage with PR firms and marketing professionals to navigate this new uncharted territory.
Inflation followed closely behind as a new risk to monitor.
Several founders reported they are taking significant steps to prepare for the looming recession. Many report a nest egg of liquid capital; 44% have plans to float on cash they’ve set aside for such emergencies. Layoff plans are another tactic to weather a recession, with 38% of founders naming this a possible solution.
In a year’s time, startup founders have had to pivot considerably from issues they were dealing with just a year ago. For example, fewer founders accessed mental health resources in 2023. In 2022, more than a quarter of founders reported mental health resources as a risk mitigation method, dropping to just 6% in 2023.