3 ms·

Why is this strange? Expected future revenue would decline, no?

• manigandham 7y ago
  How can you expect anything without a product/market fit or tested business model? Their costs should actually go down and runway extended because great talent is now cheap and available.
  • lmeyerov 7y ago
    current round becomes last round b/c unlikeliness of hitting growth numbers. customers won't pay $0.80 for $1.0 when they have no job or their budget is frozen, and investors can't invest high multiples on growth when it isn't there. ("business is sound; we can switch to profitability whenever we want, we just prefer growth now" shown false, and investors don't want to look dumb when there are other fish in the sea or they can just wait). ironically, for startups with discipline or strong fundamentals, this is bargain season for them + stronger investors. but most VC's are slowing dealflow b/c they're used to in-person and (it sounds like) are weak around their LPs or think like those in the first group, so not taking advantage of it.
  • wutbrodo 7y ago
    How can you have funding if there's literally no expectation of future revenues? What you're describing is a high-variance expectation, not the absence of one. High variance distributions are still capable of having their mean lowered.
    • manigandham 7y ago
      Plenty of companies have raised capital without a product or biz model. So sure, it's a non-zero expectation but not much more than that. My point is that companies that are already well capitalized to go through the product/market discovery and build phase without any revenue shouldn't be claiming financial distress since nothing has really changed for them.
• deleted 7y ago
  [deleted]