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Expect Some Unicorns to Lose Their Horns, and It Won’t Be Pretty
- api 11y agoThe trap: (1) (1-2 years ago) Money is cheap! It won't be this cheap forever! We should raise as much as possible now just in case it gets harder to raise in a few months/years. (2) Now we're under pressure to put all this money to work. If you have it, you have to spend it. (3) Burn rate is now very high, and our business model is proving harder to convert into revenue than we thought. Looks we're going to need to raise again. (4) Oops... it's harder to raise now and valuations are lower. Choices are to (a) cut burn rate by letting people go and nuke morale, (b) take a down round and nuke morale, or (c) sell below valuation and get almost nothing for founders and employees. Companies will experience this to the degree they did #1 times how easy it is for them to flip the revenue switch.
- deleted 11y ago[deleted]