#1RAVI GUPTA & SONYA HUANG MAY 2022 SEQUOIA Extending Your Runway#2Agenda SEQUOIA CONFIDENTIAL 1. Runway reality 2. How much runway do you need? 3. How to extend your runway 4. Questions and open discussion#3Runway Reality SEQUOIA#4WHAT IS RUNWAY? Cash balance ÷ monthly burn SEQUOIA#5WHAT IS RUNWAY? Cash balance monthly burn NET cash (cash - debt) SEQUOIA#6WHAT IS RUNWAY? Cash balance ÷ monthly burn NET cash (cash - debt) SEQUOIA Operating FCF = EBITDA - Interest - Taxes - AFCF - Capex#7BUT... Runway is not static SEQUOIA#8A Mental Framework: Runway vs Milestones Cash Balance $0 NOW SEQUOIA CONFIDENTIAL Time THEN#9A Mental Framework: Runway vs Milestones Cash Balance $0 NOW SEQUOIA CONFIDENTIAL 12 MONTHS PRIOR Time to raise! Time Ө THEN#10A Mental Framework: Runway vs Milestones Cash Balance $0 NOW SEQUOIA CONFIDENTIAL 12 MONTHS PRIOR Time to raise! Time FUNDAMENTALS THEN#11A Mental Framework: Runway vs Milestones Hope for the best Plan for the worst Cash Balance $0 NOW SEQUOIA CONFIDENTIAL 12 MONTHS PRIOR Time to raise! Time FUNDAMENTALS Solid before cash runs out THEN#12Story is not enough to raise your next round Story SEQUOIA CONFIDENTIAL Metrics Great Business Financials Valuation The financial reward for building a Great Business#133 Runway Buckets 1 SEQUOIA CONFIDENTIAL <12 MONTHS Existential to focus on this or you're gone 2 >12 MONTHS BUT NOT ENOUGH TO REACH VALUATION MILESTONE Critically important to focus on runway 3 ENOUGH FOR NEXT ROUND Stay the course and continuously optimize#14SEQUOIA How to extend your runway#15How to reduce burn and extend runway SEQUOIA CONFIDENTIAL 1. Understand where you are 2. Lay out the potential changes based on burn impact and ease of execution 3. Set a goal 4. Execute on this goal#161. Understand where you are Understand where the money goes in your P&L Where does your net loss come from? Break it into smaller and smaller parts Do the same exercise for cash items that don't show up on the P&L Understand what spend is efficient vs inefficient - SEQUOIA CONFIDENTIAL#172. Break it into component parts SEQUOIA CONFIDENTIAL Gross margin Net loss Opex#183. Lay out the potential changes you could make based on potential burn impact and ease of execution SEQUOIA CONFIDENTIAL IMPACT High impact Hard to execute Low impact Hard to execute EASE OF EXECUTION High impact Easy to Execute Low impact Easy to Execute#194. Set a goal SEQUOIA CONFIDENTIAL Your goal Extending runway from current levels to a level where you can reach a rational milestone (flat round fundraise, up round or cash flow positive)#204. Set a goal SEQUOIA CONFIDENTIAL (Your goal) + 12#215. Execute on this goal It's going to be hard People-related cuts Pricing increases SEQUOIA CONFIDENTIAL It gets better Increased ownership and motivation Sales efficiency Extended runway#22REMEMBER: SEQUOIA You will be better on the other side.#23Key Takeaways SEQUOIA CONFIDENTIAL You need a lot more runway than you think You are what your P&L says you are - you need real metrics to raise your next round Figure out your bucket, most of you are in bucket 2 It's time to execute - take the steps to reduce burn and extend your runway!#24SEQUOIA