Too much funding can kill your startup.
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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.
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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"Dilute" ?
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It's a technical term for the decrease in the percentage of a company you own as a result of a funding round.
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How would you balance that with not capturing the market fast enough and missing out on the opportunity?
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It's also easy to throw money at problems instead of taking the time to really understand and solve them.
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Would that classified as wasted JV and other collaboration as well? Got this messed up on my plate atm
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Such excessive spending is, however, almost automatic. Partly because investors pressure you to, and partly because founders overestimate the degree to which they can buy growth.
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Mind explaining why investors might want to push founders to spend more, faster?
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That's not all. In my case, when the CEO saw the high end of possible funding, it corrupted his goal. He promised unrealistic results to secure the $, then managed to those expectations. This rotted the company to the core.
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That’s because people have gone so long without seeing sound money they forgot what money is. The incentives from trillion dollar asset managers to PE firms to VC down the line is all about burning money as fast as possible. With good reason: fiat is a melting ice cube.
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