Too much funding can kill your startup.
The most dangerous thing excessive funding does is make you hire too fast. This increases your expenses and thus makes it harder to reach profitability, but it also prematurely ages the company in the sense of making it rigid and mediocre.
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If you raised too much money and just kept it in the bank, the worst thing it would do is dilute you. It's the *spending* of excessive funding that kills you.
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Why do people look at hiring a lot of people instead of seeing a lot of funding and saying "ok now we've got a long run way to figure this out"? Is it pressure from investors?
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The single worst aspect of the Canadian start up "support" from government is tying the money to hiring plans. (I'm aware of several game studios killed by this). They then wonder why the failure rate is so high.
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I'd imagine the issue to be not rigidity, but culture. Bringing too many people in from different working cultures erodes the fledgling culture of a startup. In other words too much noise to signal ratio
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Well, that’s a nice problem to have actually...than not to have funds at all
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But how to judge when you’re overfunded?
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I have seen this happen first hand.
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Best analogy I’ve heard on this was passed to me by
@ioates who heard it from Fred Wilson: a plane needs just the right amount of gas to get to the destination. To little and you die, too much and the extra weight slows you down.Thanks. Twitter will use this to make your timeline better. UndoUndo
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So the advice is to stay small as long as possible?
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