Do you think overfunding can be a detriment to a startup?
6 comments
Absolutely. When you run on 'just about' money, people get creative,they come up with novel ideas( tech, marketing,etc). When you get tons and tons of money and most of it is not yet needed,quite often it gets spent on absolutely stupid things+ the mentality changes too,as you no longer care about any costs
All depends on money management IMO.
For me its hilarious how come some companies are able to burn 100M$ and not deliver anything.
Small surgical teams with strict money management will never burn such amount of money - so they survive and deliver the product.
IMO 90% of startups fail because of irresponsible money management and bad contracts(delayed payments, extreme penalties for being late etc.)
For me its hilarious how come some companies are able to burn 100M$ and not deliver anything.
Small surgical teams with strict money management will never burn such amount of money - so they survive and deliver the product.
IMO 90% of startups fail because of irresponsible money management and bad contracts(delayed payments, extreme penalties for being late etc.)
It is even more dangerous than that - the more that gets invested, the more return is expected. You lose the luxury of staying small and simple because the investors will push you for a bigger exit, not a "lifestyle" company. Being a solidly profitable company is no longer good enough.
You can overfund but if you use it wisely, you may be ok. Just don't spend it too casually. But yea, the more funding you take, the more your investor are pushing for a high valuation and sometimes it gets crazy. I saw someone pitch a product on SharkTank with a $11 Million valuation and the product is still in research/pre-production. The argument was that they had already raised tons of money pushing the valuation to some crazy number.
Absolutely, but it’s one of those first world problems that I wouldn’t mind having!
Yes. So is underfunding.
What do you think?