I know someone working at a VC funded startup for a few years, they have way more employees than they probably need and seem to be paying 20-30% above the going

I know someone working at a VC funded startup for a few years, they have way more employees than they probably need and seem to be paying 20-30% above the going rates to attract talent. That combination makes it hard to turn a profit. Yet they keep getting more cash infusions even though they are losing money.