Embroker 2023 Risk Index Report: Plans for Survival Post-SVB?

The startup environment feels like it’s shifting more rapidly than ever. And it’s no wonder: founders are facing unprecedented event after unprecedented event in 2023. This has continued for over three years and shows no signs of slowing down.

For founders, this “new normal” is beginning to feel all too familiar. At Embroker, we wanted to explore how the startup community manages the current pressures and what steps they’re taking to combat future risks. To that end, we are announcing our second-annual Risk Index Report.

In March 2023, Embroker conducted a comprehensive survey of 500 VC-backed startup founders to help us understand how founders are doing and how last year’s surprises have affected them and their businesses. In the report that followed, we broke down those numbers, discussed the key findings, and revealed the strategies used by founders to ensure their success and thrive in a pre-recession economy. 

Here’s a sneak peek into some of our findings:

• This year, the collapse of Silicon Valley Bank (SVB), which affected  84% of founders since the last collapse during the Great Depression, was one of the more major concerns in the founder community, and rightfully so. In response, founders have adjusted their risk mitigation strategies, realizing the impending challenges of tougher economic times. Many have taken proactive measures by building a substantial reserve of liquid capital, ensuring they are well-prepared for potential difficulties in the future. While this is a good solution to implement for an unseen timeline, it is only short term. 
• Startup founders have also shared their two primary objectives: growing their product and expanding their business. While the path to success is challenging, even the most fortunate of founders must sacrifice some aspects. They are willing to invest their personal time and financial resources to achieve these goals. However, founders are increasingly cautious about protecting their reputation and brand. Unlike previous years, a growing number of founders (35%) refuse to compromise their reputation or give up control of their companies. Additionally, 33% prioritize preserving personal relationships and staying true to their initial vision.
• Effective communication is another crucial aspect of risk mitigation. Embroker introduced a new risk category—issues related to social movements targeting businesses. This risk shared the top spot with inflation at 24%, which was the common concern in the previous year. Founders recognize that the perception of their business and their personal image pose significant risks. As a response, nearly half of the founders (46%) sought assistance from public relations agencies and professionals to manage their messaging following the SVB event. 
• Aside from external, the biggest internal risk is primarily people-related challenges. The report shows, 25% of founders struggled with hiring the right talent, while 30% reported difficulties in managing remote workers. Both customers and employees seek businesses that align with their values. Consequently, many startups have turned to human resource (HR) programs as a leading solution. By implementing these programs, founders aim to attract and retain individuals who share their values, creating a strong foundation for sustainable growth.

Lately, the startup environment is characterized by constant change: Relying on past success and maintaining the status quo is no longer possible. Founders must adapt in the face of mounting adversity. 

Founders who proactively assess risks, evolve their strategies, and seize opportunities are best equipped to navigate the evolving market and build resilient and thriving businesses. This report serves as a valuable resource for founders, enabling them to gain a deeper understanding of the risks and help navigate the industry with greater confidence and success.

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