Why, when and how early-stage startups should start with crisis communications

In my three years working with early- and growth-stage tech startups, I’ve seen founders largely view public relations as a means to amplify their wins, yet rarely consider it as a shield during setbacks. Many operate under the assumption that crisis communications are a luxury for larger companies, something reserved for when their startup scales. 

In practice, smaller startups don’t frequently face issues that require crisis communication efforts. But when they do, the impact can be decisive. During a crisis—and especially beforehand—sharp and clear communication is crucial for founders to safeguard both their reputation and stakeholder support. 

That’s why startup leadership needs to rethink why, when, and how crisis communication should be part of their playbook as they navigate the ups and downs of growth. 

Why crisis comms matters for startups 

To be clear, we’re not discussing dubious businesses that inevitably collapse when their “house of cards” falls apart. In cases like Theranos under Elizabeth Holmes, no amount of brilliant comms could have saved the day. But on the flip side, there are many legitimate businesses that fall victim to gross mismanagement or face failures due to operational hiccups or external pressures. For many of these, smart crisis communications could have helped save face—at least to some degree. 

Consider an example from early 2024. Founders of a well-known European startup that had raised $65 million found themselfes in hot water when it was revealed they hadn’t paid staff for several months. Employees were fed up. When a respected startup outlet exposed this, the founders responded with, “The information is false.” That was it. Meanwhile, employees quoted in the article described a “brutal” redundancy process and how poorly the whole mess was handled: “There was zero transparency or communication. Nobody knew anything,” they said. 

At that point, it wasn’t a full-blown crisis, but the issue had clearly been simmering behind the scenes, eventually spilling over into the media. In academic terms, issues are conditions that, if left unaddressed, can damage an organisation’s reputation or operations — but they can be managed proactively. A crisis, on the other hand, threatens the very survival of the business. 

Less than six months later, the very startup was declared insolvent, while the founders remained silent. Worse still, one co-founder announced his next venture on the same day the central bank revoked the company’s licence for major regulatory breaches, leaving thousands of customers high and dry. In this statement, he shifted blame, saying there was a “lack of necessary courage and support from shareholders and investors.” Needless to say, the backlash on social media and from the community was swift and severe. The startup ecosystem is too tightly knit for this kind of scandal to go unnoticed. Investors conducting due diligence on future ventures won’t overlook this kind of history. 

Attributing this startup’s bankruptcy solely to poor communication would be simplistic. It’s likely that a combination of the business model and execution was simply not strong enough. However, mishandled communication and questionable behaviour shattered the founders’ credibility. In a best-case scenario — if they had communicated openly, handled layoffs respectfully, and learned from the experience — they might have framed this as a “failed experiment” and set themselves up for future opportunities as repeat founders.

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The truth is, most early-stage tech startups don’t make it. While the oft-repeated claim that 9 out of 10 startups fail may be exaggerated, two-thirds indeed never see a profit, according to Harvard Business Review. Whether it’s failing to find customers, running out of cash, or founders stepping down for personal reasons, the causes vary. Another tech scale-up from the same region, for instance, raised almost €115 million over seven years, only to hit a wall in mid-2024 when they had to suspend loan repayments.  However, their co-founder and CEO took a different approach—he faced investors head-on, explaining that rapid growth had outpaced profitability. The response on social media? Neutral, even supportive in some circles.  

Transparency, while not a magic bullet, helped preserve trust with stakeholders and minimised potential negative impacts on the founder’s reputation. This is key in the startup world. Investors do like repeat founders who failed previously. What they don’t like is liars and egomaniacs. 

When early-stage startups need crisis comms 

Clarification is necessary: when we talk about the need for crisis PR in a startup, it’s less about handling the closure of a company—that’s a point beyond saving. Instead, crisis communication is about mitigating damage early, preserving reputation, and navigating setbacks before they escalate. 

So when should startups get into it? The term ‘startup’ covers a wide spectrum — a scale-up with over 100 employees and hundreds of millions in funding to reach unicorn status is not the same as an early-stage startup with only a handful of clients and employees. For the former, crisis communications are often far more relevant (think of Vinted, Glovo, Bolt, or Revolut, already household names in the European startup ecosystem). For the latter, few people pay attention to its wins, and even fewer will notice when things don’t go quite right. 

Early-stage startups are typically still developing or improving their product, seeking their first customers, and working towards product-market fit, often with limited funds from early-stage investors.

At this stage, PR is crucial for kickstarting storytelling, improving buy-in from various stakeholders mid-funnel, and enhancing trust and credibility through third-party validation in the media. By definition, early-stage startups have a low probability of facing crises. In my practice, I’ve only dealt with a handful of such cases, typically involving regulatory fines, mistakenly published court rulings (swiftly retracted), or conflicts between ex-founders and ex-employees. If such businesses do face an issue, their leadership may prefer to handle it quietly behind the scenes. This can be a valid option to avoid bad press that could trigger negativity, such as cancelled partnerships or investors pulling out. 

For small startups, issues indeed may not immediately appear as “communicate well or die” (or even just “communicate” at all) scenarios. However, the problem for these startups is that they are not yet big enough to withstand a major crisis or significant issues. Consider the case of the russian-rooted startup Immigram, which was announced as the 2022 winner of a pitch competition at Slush, a prominent startup event in Europe. Following extensive controversy and criticism from journalists, investors, and social media users, Slush decided to revoke its winner status. This situation seriously damaged Slush’s reputation and ended any investment prospects for the startup itself. 

In theory, crises generally fall into two main categories: operational and reputational. Operational crises happen due to external factors like global events or the actions of third parties. Reputational crises, on the other hand, stem from perception and don’t always require a physical cause. These types of crises often surface in the digital world, driven by social media comments or concerns. Recall here AirAsia CEO Tony Fernandes’ LinkedIn post of a topless massage during a business meeting that made headlines in top tier media.  

Sometimes, reputational crises can also be triggered by media coverage or the public’s perception of how a company operates. A recent example from US big tech Intuit illustrates the risks of poor preparation and media training before important interviews, which turned into an issue when The Verge highlighted it, leading to a loss of respect for the CEO. Intuit, of course, is not an early-stage startup, but larger tech companies offer valuable examples of potential pitfalls in crisis comms and the strategic PR considerations beyond “campaigns and wins.” 

On the other hand, giving undue importance to an issue can turn a small problem into a larger issue than silence would have. For instance, the TechCrunch story about a startup that emailed customers after negative press coverage. Ironically, most customers weren’t aware of the bad press until the company alerted them. Key takeaway: press coverage alone doesn’t automatically create a crisis for all stakeholders. It’s crucial to consider the specific audience, evaluate how the situation impacts them, and focus on the issues that genuinely matter to them. 

How to recognize the issue that demand crisis comms  

It’s important to acknowledge that there is no one-size-fits-all solution for every crisis. Even though crises and crisis comms strategies can be categorised (see, for example, Andrew Griffin4), each one requires an intuitive understanding of the business landscape, stakeholder mood, the market, and the media agenda. Just as we look for “newsworthiness” when seeking positive coverage, crisis comms need a certain weight or relevance to justify its use for early-stage startups. 

How to recognise an issue that indeed needs to be addressed with crisis comms? Here are some indicators for early-stage founders: 

• Growing media attention: Journalists start asking questions about the issue, and social media channels show an increase in negative comments or customer complaints. When the conversation gains traction or multiple sources express interest, the issue is likely escalating and needs attention before it spirals. 

• Stakeholder requests for transparency: When investors, customers, or employees start seeking clarity on the issue, it’s a sign they’re concerned about potential risks or stability. Investors may reach out for reassurance, customers may question the company’s reliability, and employees may voice frustration or fear internally, all of which can erode trust if left unaddressed. 

• Operational impact begins to show: If the issue starts to visibly affect product quality, customer service response times, or project timelines, it’s more likely to impact customer satisfaction and company reputation. Additionally, if a significant amount of resources and time are being diverted to address the issue, it can further strain day-to-day operations and highlight underlying weaknesses. 

• Attempts to contain the issue backfire: If efforts to address the issue only lead to confusion or frustration, it may be a sign of inadequate internal communication. Defensive or dismissive public responses can appear unprofessional or even arrogant, often worsening the issue’s perception and accelerating the shift from an internal problem to a public crisis. 

• Loss of control over the narrative: When stakeholders or the public start speculating or spreading misinformation, founders lose control over how the issue is perceived. This can quickly fuel rumours and damage credibility, signalling an urgent need for a proactive, clear response to set the record straight and restore control over the narrative. 

Every early-stage founder makes a choice on how to communicate on an impending crisis, often guided by intuition. Yet, as with any business decision, a strategic approach is crucial. This means preparing a crisis plan in advance, practising social listening, and consulting with experts. After all, it’s far better to share a case study titled ‘How I Prevented an Impending Crisis’ at the next conference than ‘What I Learned from a Disaster that Happened.’ 

Nataliia reflects on studying the CIPR Professional PR Diploma with PR Academy

What do you see as the key benefits of having the PR Diploma qualification?

With many years of experience in communications but no formal education specifically in PR, obtaining the PR Diploma is an opportunity for me to systematise my practical knowledge, take a more structured approach to my current work, and gain access to leading case studies and best practices that shape the professional landscape. Since I am also exploring mentorship, the diploma allows me to draw not only on professional intuition, but also on academic frameworks and proven methodologies.

What has been your favourite part of the CIPR PR Diploma course so far?

I really appreciate the reflective approach and the emphasis on ethics in completing individual assignments. In our day-to-day work, we often create PR strategies, write thought leadership content, or draft materials like management proposals, but rarely have the time to pause and reflect: Why did I approach it this way? What influenced my thinking? What research informed my decisions? What could have been done better? The course has encouraged me to look at familiar tasks more thoughtfully, placing greater value on goal-setting and process, not just on outcomes.

Have you yet been able to apply any of the learning, and if so, how?

Absolutely! Working in a PR agency, I’m increasingly involved in research and strategic planning for our clients. The knowledge I’ve gained around building PR strategies, crafting key messages, and conducting research has been incredibly useful. I also found the module on storytelling and narratives particularly insightful, and I’m keen to explore this area further. The course has given me plenty of ideas, inspiration, and directions for future development.

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