Picking up where she left off, Victoria talks about how times like these can be either a bane or an unexpected boon for fledgling startups, and how to tell where you fit on that spectrum.

Listen to Part 1 here.

Julie: Hello, everyone, welcome back to the XR for Learning podcast. My name is Julie Smithson, I am your host, and today we have Part 2 with Victoria Yampolsky. We're talking about forecasting for innovation with the execution roadmap. Victoria is the founder and president of The Startup Station, an education and consulting company committed to helping founders be successful and get funded faster. She focuses on creating credible financials and valuations for early stage ventures. Welcome, Victoria.

Victoria: Thank you so much,

Julie: Yes. Thank you. And let's

Victoria: For a startup, creating a financial model needs to be a lot more granular than for a more established entity, because you need to really model your activities to be able to evaluate which activities are working, and which activities are not. And here I'm specifically referring to go-to-market strategy. It's not enough when you're thinking about your revenues to just project the top line and say "I think I'm going to get the 10 percent user growth, or 10 percent client growth, etc." because it's not clear where that growth comes from. And when you begin modeling your go-to-market strategy, you are then going to be forced to determine the drivers that make that strategy happen. And then those drivers are the ones that you can change to test the sensitivity of your business model and sensitivity to your business to various scenarios, such as the coronavirus. So when it comes to AR/VR, there are only two types of customers to which you can sell. You can sell directly to the consumer, in which case you employ a variety of marketing strategies: digital marketing, social media marketing. You may go and make podcasts such as this one, you may employ influencers, radio advertising, etc. Or you may sell to enterprises and that usually employs a sales force. Each of those strategies have assumptions associated with them. One of them is a budget. Budget is a discretionary assumption that every company can decide on. And in these times, that is a decision that your company should make, whether you want to increase or decrease your marketing budgets, depending on how aggressive you want to be or more cautious you want to be, in conjunction with your company's strategy and also how you're going to allocate that budget across the marketing strategies. Now, how do you decide whether your budget should be increased or decreased? I think you need to think about who your customers are, and whether they are affected by that outbreak, whether their economic situation is affected. If they're not as affected, there is no reason for you to change your marketing spend or in fact, maybe that's a reason for you to increase it and try to capture more market share. If your customers are the ones really affected by the outbreak, then it doesn't make sense for you to spend that marketing money that will be wasted. Then you should go more in the brand awareness mode, to make sure that your customers don't forget you. And when the situation improves, come back with the vengeance. Now, when you're thinking about the sales force, the question about the customers remains the same. And here the important criteria are the length of the sales cycle. And so the sales cycles, if your customers are affected, it may increase the conversion rates of leads, to close deals may decrease, and also the value of which contract may decrease as well. So how do you plan for that? I always recommend the low, medium and high scenario. That's something that I already mentioned in the first podcast. So you plan for the conservative scenario, the worst scenario, and the optimistic scenario. And then you'll look at how your business is going to do. I recommend highly to pay special attention to cash. Cash is not the same thing as income. Income has some items on the income statement that are not cash-based. Sometimes you book revenue before you get it, especially if you extend credit to customers. So income doesn't give you a full picture of how much actual runway your business has. And so cash flow statement, I think at this time, is the most important one to pay attention to and really make sure that your cash balance does not fall below the minimum, whatever that minimum is -- whether it's a three month runway or a six month runway -- and if you're starting to approach that, you need to start thinking aggressively about your financing options. So A) how can you cut costs before you get to the point where you have no money in the bank? Far in advance. We're also thinking about some of the debt options or equity options available to you, going to your existing investors and asking them for a little bit more breathing room as you weather this situation.

Julie: Excellent advice. Thank

Victoria: So AR/VR is obviously in a great situation, because I've looked at some data yesterday, and in 2017 the size of the market was predicted to be -- by Goldman-Sachs -- $95-billion. And then 2019, Allied Market Research predicted it to be by 2025 $571.4-billion. That's almost a six times difference. Oh, it's actually more than a six times difference. And so this is just an indicative of the speed of innovation. How fast things can change just in two years. So these are good things. So investors are obviously looking for high growth companies. The two month blip is nothing. I think investors that are investing in emerging technologies in early stage startups, they have an appetite for risk. I think they're incentivized not to let those companies fail just because of something that's a force majeure situation -- such as this one -- if there is a high potential of success in the future. So I think the important part here is to be very clear on what your execution plan is around the virus, kind of thinking through all of the issues that I've been talking before. And if you need to ask investors for money, to be very clear what that money is going to be for and potentially just cast some early liquidation options, where they may be able to get that money back sooner, and that will be more like an emergency loan as opposed to additional equity investment. Or maybe it will for them some additional sweeteners, as a thank you for helping you in the difficult times. Now, from the existing investor's point of view, it is better for them to give you a little bit the money to weather that downturn than to lose their investment in your company entirely. And so as long as they know that you have a strong execution plan and as long as there is a demand for your product, it is clear what the product development timeline is. You have a clear go-to-market strategy. That is traditionally very weak point for all startups. I think that you should be in good shape to survive this. I think from the technology startups are in much better shape than a lot of businesses that depend on people actually interacting with each other.

Julie: What advice would you

Victoria: Like I've mentioned in

Julie: I think that's a great

Victoria: Absolutely. So the website of The Startup Station is www.thestartupstation.com. Every Thursday, 12:00 PM to 1:30 PM Eastern Time, I host virtual office hours for any entrepreneur to come ask me any questions about fundraising, financial modelling, forecasting, dealing with investors, etc. You can find a link on my homepage of how to register for those office hours, as well as on my social media. And if you'd like, if you're in the process of fundraising, if you join my mailing list, you will get a startup investor search guide, which has 26 resources for different databases and different links to a database of accelerators, a database of funds that invest in women founders, etc. And so that's a great resource for somebody who is just beginning on their fundraising journey, to get a sense of what's out there, and what avenues are available to you to raise capital.

Julie: That's great. Thank you

Victoria: It's my pleasure.