At its annual meeting the end of February, Broad Street Angels (BSA) hosted a panel focused on how founders and investors should best manage through an economic downturn. On top of months of rumblings about the possibility of an upcoming recession and a challenging fundraising period for high-growth companies, the tech-focused bank’s Friday shutdown introduced new uncertainty to the financial markets and brings further risk to those looking to raise capital any time soon.
BSA’s discussion featured the CEOs of two companies the angel investing group has invested in, as well as Dean Miller, CEO of the Philadelphia Alliance for Capital and Technology (PACT).
Here are five takeaways from the panel:
1. Ask for help.
“As entrepreneurs, sometimes you feel like you’re out there all alone,” Miller said. “And when times are really hard, it can be sometimes harder to ask for help.”
After acknowledging this difficulty, Miller recognized Yasmine Mustafa, CEO of safety device company ROAR (fka ROAR for Good), as someone who is not afraid to ask for help. He later added that Mustafa’s openness, especially in tougher times, is one of the reasons why investors want to keep working with her.
Mustafa said she keeps open communication with her investors always, no matter the circumstances.
“I keep them updated on everything that we’re doing, what went well, could have been better, what’s coming up next,” she said. “And I have been doing that every month since I first initially accepted the first investment check. So I think that has helped a lot, especially during the downturn. And I’m very honest about where we are — maybe a little too honest.”
2. Save for a rainy day.
According to Miller, Philadelphia entrepreneurs tend to remember the bad times and save up in case economic downturns happen again. That mentality combined with “ingenuity” gives entrepreneurs here a “grittiness” that he views as a strength.
For example, Rich Mager, CEO of Keriton, said when the pandemic hit in 2020, his company didn’t let go of any employees, but it was conservative with money. (Keriton makes a feeding management platform for newborns.) He later said that he lived through recessions in 2001 and 2008, acknowledging that those experiences influenced him to save capital raised in 2019 and put it aside for a “rainy day.”
“Being very conservative in 2020,” plus two Paycheck Protection Program loans and a loan from Ben Franklin Technology Partners, kept the company afloat, he said: “Those literally are what kept us alive.”
![](https://technical.ly/wp-content/uploads/2023/03/Broad-Street-Angels-panel-2023.jpg)
(L to R) Doc Parghi, Rich Mager, Dean Miller and Yasmine Mustafa on the Broad Street Angels panel. (Photo by Sarah Huffman)
3. Be flexible.
Taking less capital than expected can save a struggling startup.
“One of the other things is actually being flexible and facing the reality and dealing with it,” said Doc Parghi, a member of BSA. “The alternative was much worse than the down round, right? But I see a lot of entrepreneurs who just refuse to take a down round. Some [of the reason] is ego, some is they get deluded, but it’s that or nothing. I’ve seen entrepreneurs not take it and fold later.”
Mager shared that in 2022, he expected Keriton to raise a $3 million round, but the company’s investors ended up committing a third of what they initially said. The company needed the money, so he was glad to still raise what it did, but the team still had to be careful with their spending since they didn’t get as much as they thought.
4. Look for the good.
For Mager, the “silver linings” of the past few years were the satisfaction of the nurses his company was helping, and the way that Zoom sped up the sales process.
“Hospitals would not get on a Zoom call pre-pandemic,” he said. “Now, we can get a customer on the phone in days in what used to take months. Still a long sales cycle, but we can absolutely get a lot more face time, albeit over the screen.”
Sad as it is, Mustafa said, worker dissatisfaction in the healthcare industry means that more healthcare companies are buying ROAR’s panic button-like product for staffers, clearly displaying the value of what her company offers.
“We built out an ROI calculator,” she said. “We were actually able to take the results of what our customers have seen from our solution and actually make the business case for healthcare companies.”
5. Investors can be involved with companies beyond investing.
Mustafa noted that she would appreciate executive coaching from the people who are investing in her company, as well as help making connections and recruiting new team members.
“To have someone to bounce [ideas] off of,” she said, “and help with that mental fatigue and stress and burnout, I think would be tremendous. And I have seen more VCs actually couple their investment with management coaching, which I really appreciate.”
Miller said PACT’s Mentor Connect program exemplifies that idea.
“I think that as companies grow, you need different levels, and let’s face it, you’re all investors in the room,” he said. “You invest in people.”
Sarah Huffman is a 2022-2024 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Lenfest Institute for Journalism.Before you go...
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