DISQUS

VentureBeat: Too much funding can be toxic for start-ups

  • Scott Olson · 3 months ago
    This is definitely true. Too much funding leads to an overaggressive hiring and spending plan.
  • guillaumecohen · 3 months ago
    There are additional reasons why raising too much money can decrease your chance of success: Investors expect certain returns - typically multiples of their investment- which will push you to build businesses that have a chance to provide that return, even if that chance is much smaller.... Many great smaller businesses can be built, but if the potential exits are too small for investors, they will push you for the bigger less likely ones. The more money you raise, the higher the bar for an exit is raised too...
  • nicholasthomas · 3 months ago
    I would love to see a recent study on the number of start-ups that received funding during the boom, did not get their second round, and still survived through alternate methods of funding (angels, management, etc). Changing funding methods in a pre-EBITDA positive stage is a huge hurdle for most entrepreneurs because the networks and rules are so different. Also... working in a cash constrained environment is difficult for most employees who would naturally yearn for the "good days", become dissatisfied with tough times, and look for greener pastures elsewhere. A CEO that can traverse that challenge would have to be a strong leader.
  • alexisconoscenti · 3 months ago
    How did Dov Charney do it, then? Inverse correlation? Possible sample selection bias in this study?
    It raises more questions. Think American Apparel: http://www.shoutle.com/dreamshout.html
  • alexisconoscenti · 3 months ago
    btw...the gentleman in the middle looks like former Leafs GM, Pat Quinn