Having worked for a couple of startups that raised large Series B rounds early on without much traction to show, I agree with this analysis 100%. In both cases

Having worked for a couple of startups that raised large Series B rounds early on without much traction to show, I agree with this analysis 100%. In both cases, the round was raised because the founders were charismatic serial entrepreneurs who knew how to play the fundraising game. Neither company managed to get traction after raising the large round, and I believe that having a lot of money in the bank made the problem worse. When you have a large cushion without product/market fit, there is a tendency to spend money quickly in the hopes that it will somehow lead you down the right track (VCs often encourage this behavior). Both companies scaled significantly without much real revenue and later ended up having to cut back (one managed to cut expenses in time to have runway left, while the other never did and ended up blowing through an enormous quantity of money in record time). As a startup employee, I would never again use a funding round as a sign of traction. My current strategy is to look at the fundamentals that allowed the company to raise the round, and use those to determine how the company is doing. If things seem too good to be true, they probably are.