Should you cut costs or raise money? Increasingly, the answer for smart supply chain tech companies is yes to both.
Last year, if you cut costs, it was viewed as a sign of weakness. To many entrepreneurs, it implied you were growing too slowly, couldn’t attract capital, and had to slash expenses in order to survive. Weren’t the winners just raising more money in order to “get big fast?”
Times have changed! Smart founders are looking to control their destiny by ensuring they have more than 2 years of runway. Investors are equally interested in this objective. And the best way to achieve that goal is to both cut costs and raise money.
The latest announcement in this vein is FourKites, Inc., which paired a $30 million raise from FedEx with an 8% expense reduction. ShipBob, Inc. made a similar move.
There’s no shame in reducing your burn rate. And for companies with compelling unit economics, there will continue to be plenty of investors, like Cambridge Capital, that are interested. This is just the next step in the maturation of supply chain technology.
–Benjamin Gordon, Cambridge Capital
