Uncertainty

I’ve been reading a lot recently about the relationship between uncertainty and mental health. Specifically, it’s well-documented that uncertainty drives significant anxiety. This is logical on many levels but what I didn’t realize is just how deep-seated it is. In a time when there’s an incredible amount of uncertainty, I think this is something that everyone needs to take a step back and understand. Even people who haven’t lost jobs, don’t have loved ones impacted by COVID, and whose kids are doing well in online school are affected.

Uncertainty provokes a kind of “fight or flight” response in the human brain. As we try to escape the idea of uncertainty, we analyze a situation in an attempt to make ourselves feel better. In other words, we worry in order to eliminate uncertainty and reassure ourselves. Frequent worry can lead to anxiety or depression and some individuals are more susceptible to it than others. It turns out that if you’re particularly vulnerable to uncertainty, you’ll have a heightened reaction to it in the same way someone who is allergic to a bee sting will react to that. For some people, it’s just a nuisance and for others, it’s more threatening. People who don’t tolerate uncertainty well fall prey to needing constant reassurance, procrastination, double-checking everything, and needing to do everything themselves all of which exacerbates the initial problem and leads to more worry and anxiety.

The future is always uncertain and we cannot prepare for every possible outcome so tolerating some level of uncertainty in our lives is essential. Establishing healthy routines (eating, sleeping, activity), staying present, and avoiding isolation are all good tactics for maintaining your mental health. Another is to focus on what can be done versus all of the unknowns. Obviously in this time of incredible uncertainty (work, life, kids, summer plans, camp, school in the fall, family, loved ones that are vulnerable, did I already have Covid, etc.) this becomes even more important.

I’ve been trying to think about how to apply these ideas to work and to life and looking for places where I can help reduce uncertainty for myself and for others. There are not a lot of things right now that we have real control over but this has led to decisions such as the one I posted recently about Foundry keeping its office closed until September. It’s a small thing but it allows everyone at Foundry to make plans and at least have more certainty in this one thing.

I’d encourage you to consider this for your own life. Especially for those readers (CEOs, managers, etc.) who are in a position to make seemly small moves that could remove uncertainty in the lives of those around them that could actually be very meaningful.

Working Remotely – Extending WFH

A few weeks ago, I posted that Foundry had made the decision to remain out of the office until at least June 1st. We’re fortunate that we’re in the position to work effectively this way – because of the kind of work we do and the way our company is set up (not to mention that we’re a team of 14). While we miss seeing each other, we felt it was safer to keep everyone at home.

I’d actually been thinking for months before the crisis about the changing nature of work and had intended to write a post titled something to the effect of, The Future of Work Is Remote – a trend that I thought would be accelerated when some famous remote tech companies such as Automatic (a parent company of WordPress) went public and the world could see just how productive and effective a fully remote workforce could be (wish I had written that – would have been a great reference point right now). In our own portfolio, we have a few companies that are primarily remote – TeamSnap and Help Scout come to mind, as examples. There are many across the portfolio and almost all have some remote workers or at least a satellite office. Most of these “remote” companies also have a main office of some kind that at least a subset of their employees comes to. But often that office is laid out more like a co-working space than a traditional office, allowing for more flexibility for how it is used. One of the main advantages of remote work is that you can hire the best employee for any role, not just the employee that happens to be in your town. This was a huge advantage when the job market tightened and talent for specific positions got tight and we saw companies who were more flexible about remote work be able to take advantage of individual contributors across the country and across the world.

Of course, now many people are talking about working remotely and how the experience of forced WFH because of Covid will have lasting effects on how companies organize their physical relationship to their employees. Fred Wilson from Union Square wrote an interesting post about the future of work last week, which was particularly thoughtful.

For Foundry, we have decided that we are not going to reopen the office until at least Labor Day (that date could move out but it won’t move up). We concluded that this was the safest thing to do and felt like we wanted to eliminate some uncertainty for our staff (more on the topic of uncertainty soon – in a time of uncertainty around just about everything in our lives, providing some amount of certainty, even about something as simple as when employees will asked to come back to the office, can make a big difference). We also felt that this extended period would give us the chance to lean into work at home. As one of our portfolio CEOs said on a recent call, “You can either become world-class in working from home or world-class in creating a safe work environment. It feels like the better thing is to focus on the former.” I totally agree with this sentiment and we felt unprepared to create an office environment that would be fully safe for our staff. But we did know we had the structures in place to be very effective working from home and to continue that for a long period. To be sure of that we did a few things to make sure that everyone was well set up, such as giving everyone a budget to make sure their home office environment was as productive as possible and paying for internet access. Most importantly, we’ve put in place business structures, communication plans, and a regular cadence of stand-ups that allow us to stay connected (in some ways, more effectively than when we were all in the office together).

Obviously, not all businesses have this ability and many businesses need some or all of their employees in an office either to access specialized equipment and machinery or because of the nature of their business. But for those businesses that are able, we would encourage you to consider setting a date for returning to the office that is well in the future to provide some certainty for your staff and to keep the pressure off of the system as states start to open up.

Join Me Thursday for a Business Town Hall with Rep Joe Neguse

 

Sorry for the short notice but I’ve been working with Rep Joe Neguse (CO 2) to put together a Business Town Hall this Thursday, May 21st at 11:00MT.

Joe’s been a real champion of small business (in particular minority and women-owned businesses) and I’m really glad that he’s agreed to do this.

Joe has been one of the most available Congressmen during his time in office holding over 24 town hall events in his first year in Congress alone. 

Frances Padilla from the Small Business Administration Colorado will offer some thoughts on the call as well (she heads the SBA in CO and is super thoughtful). It’s a great chance to connect with him about the both the CO response to COVID-19 as well as the federal programs that have been put in place.

You can register for the event here.  This isn’t a fundraiser, just a chance to hear from Joe directly about the response to the crisis. I hope you can join us.

An Update on The Colorado Talent Network

We launched the Colorado Talent Network on March 26 in direct response to Coloradans losing their jobs due to COVID-19 layoffs. To date, over 650 people have signed up and created a profile to gain more visibility with companies hiring. Since the launch, we’ve added the ability for employers to add open positions and job seekers to browse the 35+ companies actively hiring. We also decided to open this up beyond just the startup community adding professional backgrounds such as: Banking, CleanTech/Energy, Credit Unions, Education, Entertainment, Hospitality, Restaurant, Retail, and Other for those not captured.
While we don’t have the systems to track everyone on the list, we do know that many have found employment (note that we do track as we ask every 45 days whether they’d like to keep their listing live) and know that a number have been found jobs through their participation in the Network, which is fantastic.
For those that are frequent readers, you know I love diving into data. I tweeted a screenshot of the backgrounds of people in the group last month (when we had ~300 people) but wanted to reflect on some stats about the make-up of folks in the Talent Network now that we’ve hit a critical mass.
Backgrounds of people in the Talent Network:
The backgrounds are fairly well spread out between job functions. This is not particularly surprising as we know companies have had to make reductions across their entire teams.
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Experience level of people in the Talent Network:
80% of people in the network are entry level to middle level managers. Only 20% were at the director or executive level.
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Where people are looking to work:
No surprise that ~60% of selected Boulder/Denver as their ideal work location. ~25% are open to working remotely (no surprise there). I would like to highlight the ~17% that are looking for jobs outside Boulder/Denver metro area. These locations are: Central CO I-70 Corridor, Colorado Springs, Eastern CO, Ft. Collins, Southern CO, Western Slope and a few others.
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This is the same ideal work location data shown another way:
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If you’re a company hiring, check out the Colorado Talent Network Database for a list of candidates and please fill out this form to add a specific job posting or career page.
If you are a job seeker looking for your next role, you can add yourself to the talent list here.
You can learn more about the Colorado Talent Network here.

Social Distancing or Social Distrust

I was at the grocery store the other day and thankfully most people were wearing masks (a big change from a few months ago when I was literally laughed at when I wore a mask to that same story, early on in the crisis). However, walking around, people’s body language really struck me. In our efforts to socially distance, we are going out of our way to stay away from each other. That’s exactly what we should be doing, but I felt like there was almost a veneer of distrust and mistrust between people. What people are thinking is made harder to understand because everyone’s facial expressions are hidden behind their masks. Is that person smiling at me or growling as I gave them space coming off the end of an isle? Did they hear my muffled voice say something kind as we passed or did I come off as mad?

It’s a good idea to consider that as we’re distancing from everyone in our lives except for members of our own household, it’s important to maintain the social ties and graces that keep us bonded together as a society. I’m not talking about zoom happy hours with your friends. I’m talking about how we treat strangers when we do find ourselves out and about.

The other day, my wife was at a different grocery store, talking to someone in the long line to check out (long in part because people were appropriately distancing). She described people eyeing her suspiciously, just for talking – as if we’re not supposed to be interacting in any way.

Let’s not lose our humanity in this. There are so many examples of people being generous with their time, energy, or money during this time of crisis, which is fantastic. But it’s also important in our day to day interactions that we do not lose a sense of our communities and connectedness to each other, even if we cannot be in close physical proximity.

Circular Advice from the SBA

Quick preface to this note. I’m not your lawyer and I’m not giving legal advice. 

As I wrote about at the beginning of the week, the SBA has made a mess of the Payroll Protection Program. Yes, there are some challenges to parts of the structure of the program, but I was referring in that post to the SBAs implementation of the program and the varied guidance they’ve given since the program’s launch. They have been inconsistent, unclear and sometimes contradictory to statements made by Treasury and administration officials. It’s led to confusion on the part of companies who applied (or were thinking of applying) and ultimately to greater loss of jobs as companies struggled to understand whether they qualified or not. I can tell you from the board rooms that I’ve been in (virtually, of course) that people are genuinely trying to understand the intent and do the right thing, even if turning down the money meant that they needed to lay off or furlough some workers to keep costs in check.

Last week the SBA said it would offer further guidance before May 14th and many companies postponed or agreed to revisit decisions about the loan program once that guidance came out. The assumption had been that the SBA would offer further clarification about the “economic necessity” threshold that was prescribed in the original program language as well as a further update to its FAQ question #31, which stated that companies needed to consider “their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.” (I wrote about this at length in my post on the PPP’s challenges earlier this week).

Yesterday – May 13th, one day before the SBA’s “safe harbor” deadline (the date that they had previously said that companies needed to return the money if they felt subsequent guidance disqualified them and be essentially absolved of any wrongdoing) – the SBA released their new “guidance” and updated their FAQs related to the program (the SBA maintains a single document for this – when they update it, they simply tack on the new guidance to the end).

The wait was not worth it.

I assumed that the SBA would offer thoughts on “economic necessity” such as how many months of runway a company might have, above which they would generally be deemed not to have necessity. Or perhaps would suggest a threshold for how much revenue, bookings or other key metrics of a business might need to be down in order to qualify. Or even just a general view about how companies should consider the overall future economic impact of Covid (can we even look to the future in making our determination of need, for example). Certainly they would address the question about “other sources of liquidity”.

But they did not. They waited until the day before their deadline and ultimately added little in the way of guidance. In fact they appear mostly to have repeated what had already been said and on a few key points backtracked completely. The key FAQ related to the economic necessity question read as follows. I added the emphasis.

46. Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?

Answer: When submitting a PPP application, all borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.

SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, given the large volume of PPP loans, this approach will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns.

Importantly, borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance. SBA has previously stated that all PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by SBA for compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form. If SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request. SBA’s determination concerning the certification regarding the necessity of the loan request will not affect SBA’s loan guarantee.

This is a lot of words to basically about-face on much of the bluster coming from Treasury while offering no real guidance on the key questions I described above. Basically the SBA is saying that loans of less than $2M will be deemed to be requested in good faith and won’t be reviewed. Except in the 3rd paragraph they say that some smaller loans will actually be reviewed (“other loans as appropriate”). Although the document is inconsistent, it does seem appropriate to at least hold out the threat that some smaller loans will be reviewed (certainly some will have not been made in good faith or even been fraudulent; in fact likely at a higher rate than larger loans).

The real action is in the last paragraph. Here the SBA surprised pretty much everyone by basically saying “we’ll review your loan and if we think you didn’t qualify the penalty will be making you pay it back.” This essentially extends the safe-harbor they already offered (which required companies to pay back a loan in order to qualify). There’s some grey area there, because in theory some other agency could take up enforcement action against a company that didn’t return the money prior to May 14th, but this seems like an unlikely scenario. To be clear, companies that take the money and they are required later to pay it back (but who in the meantime kept people employed and spent the money in ways they wouldn’t have if they had never taken it in the first place) are on the hook for the cash, so there are real consequences to getting it wrong. But for many companies on the bubble the consensus seems to be that they should take the money, apply for forgiveness (which will trigger a review of the loan, per the new guidance) and let the SBA decide if they qualified or not. It’s hard to argue with that logic given this new guidance. Especially because it appears the money in the program is not going to run out quickly (and therefore the argument that one company is effectively taking money from another company that didn’t get their loan application in as quickly is gone).

Personally, I was hoping for more. We’ve tried to be thoughtful in our approach to the PPP program and the SBA’s guidance. But with this latest round of advice, it’s hard to argue that companies on the margin shouldn’t lean on the SBA to arbitrate whether they qualified or not and stop their board level arguing. I know of a number of companies that had decided to return the loan but reversed course because of this new guidance, or who were on the fence waiting for the new guidance and have now agreed to keep the money and let the SBA weigh in directly.

Perhaps this is exactly what the SBA wanted, but at least for me it was far less in terms of “guidance” than I was hoping for.

The SBA Needs To Get It’s Act Together On The PPP

The SBA’s implementation of the Payroll Protection Program (PPP) has been a mess. The intention was to provide needed relief to businesses that were impacted economically by the COVID-19 crisis. But, while very well-intentioned, it’s implementation has been flawed. In particular, the SBA has given inconsistent guidance that continues to change and evolve, leaving companies left to wonder if they qualify or not. The result has been not just confusion but also job losses that were likely not what Congress intended the program to result in.

The Paycheck Protection Program was established by the CARES Act to help small businesses keep paying their workers. The program allows businesses with fewer than 500 employees to apply for low-interest loans to pay for their payroll, rent, and utilities. The program’s original $349 billion was allocated between April 3 and April 16. The second allotment of $320 billion was signed into law on April 23 and the SBA began accepting applications on April 27.

The program sparked confusion from the start. After its enactment but before it was implemented, there were questions about the SBA’s “affiliation rules” which can disqualify companies if the aggregated number of employees at affiliate companies is greater than 500. That rule was designed to prevent companies under common ownership from accessing SBA funds, but as it applied to PPP, it potentially excluded any venture-backed companies where venture firms owned greater than 20% equity (and where the companies were not affiliated, they just shared a common investor). Those rules seem to have been ironed out and there was initially a rush of venture-backed companies wanting to avail themselves of help under the PPP. 

Many VCs urged caution (see my post describing Foundry’s view that companies should carefully consider if they met the program criteria for example, and a New York Times article on the subject, as just two examples), wanting to make sure that any company applying truly qualified for the money. It was always our belief that some venture-backed companies could and should apply (venture-backed companies employ about 2.7M people in the US) but it was unclear from the start which companies were (or should be) eligible. This confusion was compounded by several problems with the way the program was set up. The funds allocated by congress were limited and everyone expected the program to be oversubscribed. Secondly, the funds were to be given out on a first-come, first-served basis. This exacerbated the first issue and meant that anyone considering a loan needed to rush to apply and many companies did so without the space and time to think through whether it made sense for them. Additionally, the funds were distributed through the existing banking system – the only practical way to get that much money into the hands of companies that quickly for sure, but also leading banks to prioritize their own customers over others (see below for ways this created challenges to the fair disbursement of funds) and to their prioritizing larger loans over smaller ones. 

The language of the act requires companies to certify that the uncertainty of current economic conditions makes it necessary to apply for the PPP loan to support its ongoing processes but it was not clear what “necessary” actually meant. Subsequent to this, the SBA released a series of FAQs in an attempt to clarify which companies qualified but this only served to further confuse things. In particular is the question of what “economic necessity” means for a business, which was the standard set in the original act by Congress. Particularly confusing to many companies was the statement that companies needed to consider whether they had alternative financing options. This concept was first brought up in the infamous question # 31 on one of the SBA’s FAQs that was released about a week ago. In that FAQ the SBA stated (emphasis added):

[B]efore submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. 

The original FAQ related to public companies but was quickly extended to include private ones. Exactly what this means isn’t clear. It doesn’t appear to mean that a company needs to have a financing offer, just that they could likely raise money elsewhere; and while the PPP isn’t a “cap table protection program”, as venture attorney Ed Zimmerman has pointed out, it’s not at all clear where the bar is on alternative financings and how a company should evaluate the likelihood of its obtaining money elsewhere. Nor is it clear what that last statement means, “not significantly detrimental to the business.” 

This new guidance came on the backs of some companies clearly abusing the intent of the program, if not at the time the exact language of the Act. For example, AutoNation car dealerships ($77M), Ruth’s Chris Steak House ($20M), and the Los Angeles Lakers ($4.6M). It’s understandable that public option, as well as the SBA itself, felt that the program should be clarified such that companies like these were not eligible (each of the companies above have said they will return the money).

At the same time, as I’ve written about a few times, PPP money is not getting to many of the kinds of businesses that Congress clearly intended to be helped. This is particularly true for women and minority owned businesses but also true for a wide swath of Main Street businesses that either lacked the banking relationships to access funds (which were distributed through a subset of banks in the US that were qualified under a specific SBA program) or for whom the loan program or its forgiveness element wasn’t practical. For instance, the measurement of payroll for forgiveness – a central element of the program – is 8 weeks after funds disbursement, which makes it impractical for businesses that are unable to restart their businesses in that time period (it would make much more sense to have the repayment period begin after a state’s stay at home order has been fully lifted). Additionally, the initial terms of the loan stated that the full amount of the loan needed to go to payroll, rent/mortgage, and utilities with no specific percentage of the funds going to each. Now, no more than 25% can go towards rent/mortgage and utilities. 

As companies try to figure all this out, the PPP Safe Harbor has been extended to May 14 (meaning that companies can return their loans by that time and avoid any potential penalties). But we’re still waiting on final clarification on the rules, which the SBA has said is forthcoming (but have not yet been released – we’re 4 days out from the safe harbor ending). The result is confusion and quite a bit of disagreement across businesses. Many companies are trying to rely on the initial intent of the act – preserving payroll – and arguing that if they plan to reduce staff but for taking the PPP money they should qualify for the loan. That clearly isn’t the way the SBA is interpreting the Act nor how they’re guiding the business community (but it is likely closer to what Congress intended when they passed the Act). Just where the line is between need (and payroll preservation) and greed isn’t very clear. This must be clarified and done so quickly. That Treasury Secretary Steve Mnuchin has stated that all loans greater than $2M will be audited is adding to the pressure companies are feeling to get this right (and presumably the vast majority of those audits will have the benefit of a year or more of hindsight; it will be hard in many cases to divorce what actually happened from what a company thought was happening in real time). 

The lack of clarity is causing real world challenges for businesses. In just one example, Zumasys, Inc., a California software company, has sued the SBA saying that it should not have to pay back its $750K loan since the SBA changed its rules for eligibility after their loan had been dispersed. They argue that they already spent the money for what the program was intended for and qualified based on what they understood the rules to be at the time. I’m not arguing for their case – just pointing out that 4 weeks into the program the SBAs changing guidance is causing real issues. This is a meaningful issue for companies who took money and kept people employed in good faith based on their understanding of the program at the time only now to have the rules changed on them. If a company returns the money they’re still on the hook for the payroll they incurred. Presumably (and we know this from our own direct experience) some will have to cut deeper now to compensate.

In related news, The Washington Post reported yesterday that the Economic Injury Disaster Loan Program (also administered by the SBA) has reduced their loan limit from $2 million to $150K and is only accepting applications from agricultural interests, due to its backlog. 

It’s clear that the SBA is out of its depth and cannot cope with both the volume and the complexity of our country’s small business needs right now. While US entrepreneurs are the ones dealing with the clumsy handling of these loans in the short term, our overall economy will be dealing with the fallout for years.

The Changing Nature of Entrepreneurship | EforAll

Entrepreneurship in the United States is changing pretty dramatically – in ways that many of us have failed to notice or understand. Specifically today’s American entrepreneurs are more likely to be female and non-white. In fact, the number of women-owned businesses has increased 31 times between 1972 and 2018 according to the Kauffman Foundation (in 1972, women-owned businesses accounted for just 4.6% of all firms; in 2018 that figure was 40%). Meanwhile, the fastest-growing group female entrepreneurs are women of color, who are responsible for 64% of the new women-owned businesses being created. There’s a lot more to dig into here, which I’ll do in future posts. But it’s urgent that we begin to understand this because we’re failing to build systems to support these new entrepreneurs. This has become especially clear in the current economic crisis, as I pointed out in this piece I wrote with Elizabeth Macbride a few weeks ago for CNBC as well as this post from last week. Relief money authorized by congress under various programs of the CARES Act and other initiatives is failing to reach many women and minority owned businesses and is highlighting structural issues with the way we support entrepreneurs in the United States. For example, it has been widely documented that women and minority owned businesses are not accessing aid through the Payroll Protection Program (PPP) – see for example, here, here, here, here, here. This program requires businesses to have relationships with certain approved SBA lenders, which women and minority owned businesses are less likely to have. Its initial roll-out excluded certain types of financial institutions (most notably CDFIs) which disproportionately bank these businesses. It also left much of the underwriting criteria up to the banks themselves, who favored other customers. And the program itself – based on W2 payroll and primarily benefiting businesses that were in a position to open up quickly – failed to address the kinds of businesses most likely to be started by this new generation of entrepreneurs.

We can and must do better.

Which is why I’d like to highlight for you a great program called EforAll.  Launched in 2013 with a mission of partnering with communities to help under-represented individuals successfully start and grow their businesses, EforAll is a pretty special organization. I’ve gotten to know them well over the past two years (Brad and his wife Amy, as well as Greeley and I are financial supporters of EforAll). EforAll combines immersive business training, mentorship and an extensive support network to help support their entrepreneurs. It’s incredibly compelling and urgently needed – now more than ever. EforAll is up and running in 9 communities in Massachusetts and Colorado and, to date, they’ve supported entrepreneurs in starting almost 350 businesses, 83% of which continue to be actively pursued by their founders. About a year ago we launched in Longmont and that program just graduated their first class (I attended the virtual demo day/graduation – it was inspiring).

We’ll be starting up another Longmont program this summer and are looking for mentors in Boulder and the Front Range (although potentially for this one anywhere – we anticipate much of this summer’s program will end up being virtual). This is a fantastic opportunity to help female, minority, and immigrant entrepreneurs pursue their business ideas.

A few stats:

EforAll National
– Over 500 ventures graduated
– Nearly $35M in capital raised
– Over $25M in 2019 revenue

EforAll Longmont
– 9 businesses (11 entrepreneurs) went through first Longmont accelerator
– Those entrepreneurs were from the North Metro area, Boulder County, and Weld County
– Ventures in the first program ranged from gluten-free beer & pastries being made from ancient grains & traditional Peruvian recipes, to a financial literacy app for elementary school students, to a husband & wife duo manufacturing adaptive underwear for individuals with sensory disabilities
– Highlights from the first accelerator include an entrepreneur securing her first two grocery store clients for her plant-based meat product, an entrepreneur raising 40k from friends and family, and an entrepreneur launching their first online marketplace for disability-focused products
– EforAll Longmont was also mentioned in this href=”https://www.nytimes.com/2020/02/07/your-money/entrepreneurship-philanthropy-gururaj-deshpande.html”>New York Times article, received support from Google, and worked with more than 50 volunteers during our first accelerator (including about 30 mentors)

EforAll Mentoring Ask – Mentoring with EforAll is a fantastic way to support small businesses and aspiring entrepreneurs in your own background. Accelerator Mentors come from a variety of backgrounds and use their business and leadership experience to guide new entrepreneurs through the process of starting or growing a business. Mentors work in teams of three and are matched with an entrepreneur based on schedule availability and desire to work together. The team meets as a group to help reaffirm topics and themes raised during classes, while also strategizing with the entrepreneur on how to reach their specific goals during the program. Mentoring with EforAll is a 90-minute per-week commitment from July-September and all meetings between entrepreneurs and mentors will take place virtually. For more information, you can click here and you can also email EforAll Colorado Executive Director, Harris Rollinger, at harris@eforall.org.

Colorado is Opening Up. Foundry is not. Here’s our Thinking.

In mid-March, I wrote a post about how Foundry Group had joined a number of other businesses in the early adoption of work from home and other practices to stem the spread of COVID-19. We recognized that this would be an essential part of helping create social distance and by doing so, flattening the curve.

As Colorado and many other states are moving to a more relaxed set of policies (although Denver and Boulder are waiting a few more weeks until they follow the rest of the state), we’ve decided that for Foundry we’ll continue our work from home policy until at least the end of May (Brad’s post on that here). We’re doing this because we’re in the fortunate position where we can and we’re being public about it because we’re hoping other businesses that are in a position to do so will do the same. We’re fortunate at Foundry to operate the kind of business that works well remotely and although we miss seeing each other in the office and the natural collaboration that happens when we’re all there, our business functions pretty much normally even when we’re all remote. And, like other businesses, we’ve been very deliberate about trying to replicate our in-office dynamic online (for us that includes several weekly stand-ups, extended time together on Mondays as well as ad hoc “cocktail/mocktail hours”. We also recognize that there are many businesses that need to open up sooner and we feel that they should take priority over companies like Foundry that can continue working from home without big disruptions to our operations.

If you are running a company that is similarly situated, we hope that you will follow suit and wait a bit longer to open up. We’re going to reevaluate opening up at the end of May and decide if it’s appropriate for us to re-open the office in early June or if we should extend our work from home time even further. The more effort we put into mitigating this crisis, the more flexibility we will have later in the summer to get things back to normal.

We’ve helped over 150 small businesses navigate the crisis | Here’s what we’ve learned

I wrote recently about the The Finance Assistance Network (FAN), that I helped set up (along with Lew Visscher and Phil Votteiro) three weeks ago to offer pro bono financial advice to small businesses affected by COVID-19. So far the network has helped almost 200 companies navigate questions around surviving in the post-Covid work and to access PPP and other federal assistance. Tomorrow (Friday, May 1) at 9:00MT the FAN is hosting a webinar – Extending Your Runway: Small Business Tools to Survive a Cash Flow Crisis. The webinar is hosted by Good Business Colorado and is sponsored by a number of organizations advocating for small businesses including MAPR Agency, The Bell Policy Center, Small Business Majority, and others. The webinar is free and you can register here. I’m encouraging everyone to share the information about the webinar and the FAN on their social media channels and especially with small business owners in their networks. Supporting small businesses during this crisis is crucial to the overall health of our economy so please spread the word about these free resources.
Additionally, Lew, Phil and I published an op-ed in The Colorado Sun this morning talking about what we’ve learned so far helping these small businesses navigate the crisis. I though it was worth sharing here as well. We will continue to aggregate learnings as we expand the network and try to use them to both influence policy as well as to accelerate and expand our ability to help businesses that continue to struggle through the Covid-19 induced economic crisis.
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Early Monday morning, the Small Business Administration’s application system for its second round of PPP funding crashed within an hour of coming online. The first round of $342 billion — nearly ten times what the SBA administers in a typical year — was depleted in just 13 days. And like the first round, this latest infusion of $310 billion will be delivered on a first-come, first-serve basis.

Getting money into the hands of small businesses is a good idea, and we applaud the government’s quick actions. However, in the haste to create and pass these two rounds of emergency financial support, there are some gaping holes that must be addressed quickly so companies can make the most of these lifelines and extend their financial runways. 

According to data released by the SBA, the average PPP amount was just over $200,000. That equates to a nearly $100,000 monthly payroll — hardly “main street” businesses. For companies reliant on PPP funding as a lifeline for operational survival, the stakes for accessing and using this funding wisely could not be more high. 

How high? A just-released survey from Goldman Sachs finds that nearly 70% of small businesses will likely change their business models for good as a result of COVID. In other words, if companies are relying on the same strategies that they had in place in January to keep their doors open, the ability to adapt and update practices now has an even greater urgency. Even in good times, most small businesses carried between one to three months of cash reserves. More than ever, understanding and then extending financial runways for small businesses is a critical component to helping businesses survive.

A little less than three weeks ago, we helped create the Finance Assistance Network, a pro bono alliance of senior financial professionals, supported by legal, HR and other resources that are available for free to any small business or nonprofit organization impacted by COVID, regardless of size or location. The network connects business owners with a small army of CFOs, controllers and senior financial professionals willing to help with business and cash flow planning, applying for PPP and EIDL money and urgently needed support. 

Since launching earlier this month, the network has helped more than 150 companies, giving us unique insights into the special challenges and limitations of the CARES Act. For example, the companies we’ve helped appear to be especially impacted by the eligibility criteria for PPP funding because the programs exclude many small businesses that can benefit the most from this support. 

Many small businesses rely on consultants and part-time 1099 workers who do not appear on payroll calculations (they can apply as individuals to the program, although anecdotal evidence is that few are), which can hurt their chances for larger loans. Likewise, businesses owned by women and people of color are at special risk of being excluded from PPP funding because they are more likely to make use of contractors and less likely to have established relationships with SBA approved banks.

The feedback that we hear most frequently is that the calculations of payroll are far too small to provide the stabilization needed for ongoing survival and continued operations. Many small businesses have expenses, such as rent and utilities, that are significant relative to their payroll costs. By stipulating that funds need to be spent on payroll to qualify for forgiveness and by covering only an 8-week period, the current program effectively acts as federal unemployment insurance, rather than a business stabilization program.

Our biggest takeaway is that companies need more flexibility in how they spend aid dollars to balance what’s in the best long-term interest of their business and in the best interests of their employees. Many employees will likely be out of work well past the 8-week period anticipated by Congress, and some are better off individually taking enhanced unemployment benefits. 

This Friday, we are partnering with Good Business Colorado to put on a free webinar, open to all, to share how companies of all sizes should be thinking about approaching business planning through the crisis. We’ll also discuss how they can access the pro bono resources provided by the Finance Assistance Network, apply for PPP and other loans and get expert guidance on using these funds to help your company extend your financial runway. Please join us by registering at https://bit.ly/3bM3OPg.

Seth Levine is a partner at the Foundry Group. Lew Visscher is the founder of Lew’s List. Phil Vottiero is a partner at High Plains Advisors. Together, they are the founders of the Finance Assistance Network, a pro bono network of more than 100 senior finance professionals who have come together to help businesses navigate and survive the COVID-19 crisis.