Founders have been forced to play funding frogger, leaping from lily pad to lily pad. The modus operandi has been to grow, jump to your next tranche of money, grow, and leap again. It works occasionally, but most of the time, it doesn’t. Of late, there are fewer and fewer lily pads. Those that remain are spaced further apart. It is time to stop hopping and start swimming. 

Unless you offer something disruptive or create a new category, stop looking for your next landing place and learn to swim. Figure out how to cross the river on your own.  

Crossing alone requires slowing the pace of growth. Gone is the need to open more doors or to grow ACV. A dogged pursuit of velocity replaces it. The most capital-efficient revenue source is optimizing the doors you are already in. Focus on customer acquisition is replaced by a concentration on lifetime value and average order size. Simply, profit is prioritized over growth.

Working capital is still needed but won’t come from venture funds with venture terms. For brands under $5MM in revenue, it is unlikely to come from commercial banks or asset-based lenders. Instead, it will come from aligned funders that are patient. Funders that use structured exits like the CARE, variable-based convertible notes, or redeemable equity. 

I find myself simultaneously terrified and optimistic. This is one of the most challenging fundraising environments I can recall. Some great brands are on the brink, and that is scary. But demand remains high. Consumers want our products. In time, the industry will solve the funding gap. More investors will utilize structured exit instruments, and fintech solutions will be developed that help alleviate some of the current challenges. Furthermore, this correction brings a renewed focus on unit economics and sound business practices, which excites me. 

So what do brands do now? Survive to thrive. Unlock any cash in the business. Sell off excess inventory. Reach out to existing creditors and vendors and ask for better terms or lower payments. Say no to any opportunity that doesn’t offer a positive contribution. Keep teams lean and nimble. Get comfortable with a slower pace of growth. Stop spending on activities that don’t have a direct corollary to a return on investment. Yes, that potentially means cutting spending on social media, influencer marketing, and more. Be patient, resilient, and disciplined. 

What I am prescribing here takes work. Especially if you are one of the brands on the brink. But I am confident that things will get better. Learn to swim. You’ll find plenty of opportunities once you arrive on the other shore. Stop playing funding Frogger and just concentrate on building the best business possible.