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Finding Funding During COVID-19: Startups Share Their Strategies

Data Gumbo Founder Andrew Bruce was in the middle of closing a Series B investment earlier this year when one of his investors decided to hold off on providing the funds until August as the COVID-19 pandemic surged.

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His Houston-based technology company creates an interconnected blockchain network to streamline smart contracts management for industrial companies, such as oil and gas. This is an industry also affected by the pandemic due to people staying inside rather than driving.

Bruce told me he worked out a bridge loan with existing investors and is now in the process of putting the Series B together again with better sales and a stronger story. This extra time is also enabling Data Gumbo to clear some existing hurdles, he added.

“Companies like ours are saving the oil and gas industry money, so sales are booming,” Bruce said. “It turned out to be a good thing for us to hold back and be able to come out with a more positive story.”

While not every startup funding story ends positively, entrepreneurs agree they face a difficult funding environment. As Bruce mentioned, the COVID-19 pandemic is playing a big role in investors not writing as many checks right now.

To the point, Israel’s customer research startup Wizer Feedback Ltd. surveyed more than 100 venture capital funds back in March, and reported that more than half said they are either halting new investments altogether or significantly cutting back. The survey also found that investors thought this environment would last 12 months.

I recently spoke with some entrepreneurs about why they decided to take the funding routes they did. Some even addressed how they are pivoting during the pandemic to stay on course.

Capella Space

Capella Space CEO Payam Banazadeh told me that startups should look into winning government contracts, if they can. He said it is not easy to get government contracts—the initial sales cycle is long, there is bureaucracy, lots of paperwork and internal processes–but if a startup is far enough along that it is about to release its product within six to 12 months, the government may do advanced payments contingent upon milestones.

In May, the San Francisco-based satellite communications startup signed a contract with the U.S. Department of Defense to sell its services to the U.S. Navy.

“It shows that the government is still in business, and if they find a product they like, they are not slowing down the purchase,” Banazadeh said. “The government’s job is not to come in and bail out companies, but it is to identify startups that are doing interesting things. It will help companies raise additional capital and de-risk their companies with investors.”


Houston-based Nesh, a smart assistant for the oil and gas industry, is raising a $3 million seed round. Founder Sidd Gupta told me it is easier to talk to investors right now—he’s had more conversations in the past three months than in the past year—but they are not yet willing to write checks.

Gupta said he has always wanted a strategic partner in the energy and industrial space to help his 2-year-old company navigate the industry and build up use cases.

“We had one strategic partner and one institution in our pre-seed round last year, and we are going for something similar in the seed round,” he said. “However, with COVID, things are more fluid.”

Gupta said he is waiting for both the pandemic to ease and the oil and gas industry to recover. For now, Nesh is pivoting to expand into other energy sectors, such as renewables and refineries, even releasing a free version of its platform.


Husband-and-wife entrepreneurs Max and Kate Spivak started Laally two years ago and has spent that time commercializing its breastfeeding assistance device, which sold out right before COVID-19, Max Spivak said.

When considering funding options, the pair surveyed the funding gambit: angels, venture capital, debt, nonprofit and partnering with big companies. Many wanted a proof of concept, a track record and to see if the product was selling before any kind of investment would be given, he told me. After deciding to be mission-driven, the Spivaks made the choice to self-fund Laally.

“As a family and first-time entrepreneurs, we decided to risk our own money on it and bring in a partner for the tech side,” Max Spivak said.

While the Spivaks are able to run the company the way they want, there have been challenges along the way: Laally’s budget is also their personal balance sheet, they’ve exhausted savings because they are not taking paychecks and it has been difficult to scale the product without funds to pay for the materials.

Meanwhile, their business also halted during COVID-19 when production was delayed, and the Spivaks couldn’t go after the government’s Paycheck Protection Program because they didn’t have payroll or payroll history for unemployment.

“Disruptions across all aspects of financial security at once have a larger impact on self-funded startups because other sources of income dry up in a black-swan event,” he said. “The good part was that we didn’t have any investor pressure to liquidate or any investors calling for their money.”

Illustration: Li-Anne Dias

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