On my last day of a trip to Denmark. Last Friday I watched on TV Jacob Hübertz the Interim CEO of the Danish Vækstfonden, which purpose is to discover and develop the companies that Denmark cannot afford to miss out on.

Jacob explained how a growing number of Danish startups have indicated that they may not survive due to a combination of more expensive products (high inflation >10% year to year) which customers don’t buy enough of and a lack of growth capital.

I came to think of our own innovation environment in California and all the SPACs that went public over the last few years and have had a tough 2022 so far.

Many of them are in the E-Mobility and Renewable Energy space and many are in trouble or even fighting for survival. The reasons are manyfold:

1. The adverse stock market conditions after the Covid period
2. Management that lacks the experience of building “a bridge over troubled water”
3. Finding their supply chain clogged leading to product delays
4. Costs increasing fast making their products more expensive
5. Rosy revenue forecast evaporating into the blue sky 
6. Valuation crash i.e. access to (cheap) capital rapidly disappearing

In short, the good times are over for these SPACs, and the music has stopped – at least for now.

But don’t despair – at least all you “good” SPACs out there – the sky is not falling. We have been through these cycles before and the “best” SPACs will come out on the other side roaring. New champions are being created during this time of market downturn.

It might be questioned if any, even major best-in-class consulting firms or major VCs can deliver useful analysis and GENERALLY solve this class of problems. 

In Next-Dimension we also do not make this claim. What we can promise is that we can support SPAC boards/managements with non-biased strategic advice based on extensive experiences from previous downturns and numerous erratic business cycles for example: 

1. Stop spinning – get real
2. Cash is king – conserve cash – above all don’t run out of cash – that’s the end
3. Revaluate strategy and growth prospects 
4. Motivate employees, walk the talk; show that you have their backs
5. Brutal honest and realistic forecast of the revenue
6. Pair the organization forcefully and fast (but gracefully) to match a realistic growth scenario
7. Provide reliable and honest revenue guidance
8. Under promise and over-deliver (UPOD)
9. Streamline the communication strategy to become a no-spin zone and regain the trust of the market and your employees

We are all in the same boat and we all want a livable planet for generations to come.

Interested in what you the LinkedIn community thinks is best advice (to the most promising SPACs), so we can help them survive and thrive; we need them to create a sustainable planet.

Credits: modified picture from Economist

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