If a company is struggling to show commercial traction by the 6-month mark, winding down may be the best option. We don’t wait until a company has completely run out of money to wind down because the wind-down process has associated costs.

When to wind down

The primary reason OCV may recommend winding down is that the company is unlikely to fundraise successfully within the expected timeframe.

Wind down recommendation factors:

1. Traction: If a company is struggling to find traction, not showing growth, and unlikely to achieve the needed growth goals. Companies need a growth story to fundraise.
2. CEO: If a struggling company doesn’t have a CEO in place and hiring a CEO in time to fundraise is unlikely. Companies need a CEO to lead a Seed round.
3. Runway: If a company is nearing the end of its runway and fundraising is unlikely. Companies need enough cash on hand to cover wind-down costs.

In certain situations, founders may wish to continue their fundraising efforts after a wind-down recommendation has been made. Founders will be required to take minimum pay to extend the runway.