Approx one month ago, we all sh*tted in our pants – yes, you diiid 💩.
But last week, First Citizens BancShares announced the acquisition of Silicon Valley Bridge Bank. Phew 😮💨.
So that puts an end to the story, right?
No, José. You won't escape so easily.
Before 2023 comes up with another clever idea to get us killed, or worse, expelled ⚡ we need you to panic a lot more about how you're managing your finances. We are almost begging you.
WE KNOW we're being repetitive on the subject, but all that let's adjust our sails together crisis slogan was not just creative copy, Karen. You need to adjust them!
📌 Where to start?
By checking what other founders and financial experts are up to.
Here are 3 financial management practices that some friends have been doing and that you should scratch from your to-do list before the next unsolicited life challenge for entrepreneurs arrives.
Basic, and yet...
We all learned the golden rule of investing in school: never put all your eggs in one basket. But we have more than one rebel here.
According to NFX's Founder Sentiment Report: The Post-SVB Edition, most of the companies surveyed had the entirety of their cash in 1 institution. Huh!
NFX surveyed 870 Founders in their network after SVB's collapse.
For Thomas Baldwin, co-founder of Kocomo, the best practice is to diversify and divide your cash between 3 to 4 institutions nationally and internationally.
And if you have the money between international and local accounts, Patrick Kolencherry, principal product manager at Latitud, recommends having 6 to 12 months’ worth of operating expenses in the local account. Shoot for the 12 months.
Keeping lines of credit open is also a safety cushion that can make your early-stage startup more comfortable when facing any crisis.
Thomas advises searching for secured lines of credit. These allow you to borrow as much as you need up to a certain amount. When you make payments, the amount of available credit is replenished. You can ask for money again and again.
We don't care how busy you are. This is non-negotiable.
Juan Manuel Barrero, co-founder of Lazo, recommends you look at your cash flowand profit and loss statements (P&L). Thomas adds cash burn and runway to that list.
You need rolling forecasts of your cash flow to answer these questions correctly. And by that, we mean keeping track of and updating your payables and receivables weekly and monthly.
📌 Having this mindset will also help you a ton in your fundraising efforts – especially now.
You know what else will help you? Read the full article with the other 2 recession-proof practices and extended info on our blog.
Extra mandatory financial calculations that you MUST check to keep your startup alive. Reviewed, liked, and recommended by our own FP&A Lead 😎.
Huge public GRATITUD to the Latitud Finance team for the work done 😭💙 #RaphaWeLoveYou
Are you being too hot for your own good? Capital efficiency is necessary to maximize runway and get investors in. So even if you’re confident in your numbers, this is no time to stand idle: go measure your capital efficiency this Q2.
You should be comfortable calculating and discussing your runway at any time. And if you KNOW your runway will end in a couple of months, what the F are you doing sitting there, Antonio? Ándale!
Understand income statements, cash flow statements, balance sheets, and concepts like accrual vs cash basis, contribution margin, lifetime value, and operating working capital. You are welcome.
🍊 Recipe #3: Understand the negotiation's terms and implications
Let's say you have a possible deal. We are positive all you want is to end the investment negotiations as quickly as possible to go and get sh*t done.
But your anxiousness can't win this battle. You need to do your homework on tricky clauses commonly found on term sheets for Seed rounds BEFORE signing any paper, Diana.
And if you don't understand something, go ask the hard questions to your potential investors. VCs actually like to see that you are interested and thinking about the long term.
📌 Are you a Brazilian startup fundraising and need some help to incorporate? Visit Latitud Go and check how we can make your life easier 😎
🎮 New gamer
Our portfolio company Arvo just arrived on the scene. Arvo is a data intelligence startup that uses artificial intelligence and machine learning to streamline and improve the audit of payments for services in the private healthcare network.
Congrats to Rafael Tinoco e Fabrício Valadão for the launch 🚀.
Rooting for your success, Raphael Machioni, Vagner Dutra, and João Bergamo 💪
😌 Breathe now
Kaszek Ventures has raised US$975M in new funds for Latin American startups.Kaszek plans to put this money into 20 to 30 companies out of its early-stage fund, with check sizes ranging from US$500k to US$25M, according to Hernán Kazah.
Huh, so good news does exist!
👭 Friendship goals
In case you missed it, we announced a partnership between Latitud and Google for Startups as a way to strengthen Latin America's startup ecosystem. 💙
Founders in the Latitud community will have access to the best of Google in education, connection, and resources. Benefits spoilers in the link!
-> Every time one of your friends subscribes to our Newsletter, your runway figures out how to last an extra month 😱 So ask them to subscribe!