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One of the issues with 'raising money' is that the investors typically want to see you spend it, to generate a return. VC were famous for this. Spending money,
by mech422 5y ago
One of the issues with 'raising money' is that the investors typically want to see you spend it, to generate a return.
VC were famous for this. Spending money, growing to the 'magic' 50 employees, etc. became full time jobs. That's part of the reason a lot of startups are basically 1 year contract gigs - its very hard to tell backers you're stretching the money for a longer runway.
- lmilcin 5y agoI can understand VCs wanting to get return on their investment asap but I can't being blind to the fact you can actually be hurting prospects of the business you are trying to profit from. From a founder perspective I guess it would be important to skip investors that are not compatible with your vision. I understand it easier to say when you are not actually looking for money to keep your business alive...
- jjeaff 5y agoIt's not just getting a return on investment. They also want to pressure you into a position that will require you to come back to them for money. Each new round of fundraising is a chance for them to significantly increase their ownership in the company. They must get you to spend money just a bit faster than you are making it, or else you won't need then anymore after the early rounds.