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> People are burning millions a month. Capital markets don’t exist What does "capital markets don't exist" mean here?
by wobbly_bush 4y ago
> People are burning millions a month. Capital markets don’t exist
What does "capital markets don't exist" mean here?
- tmn 4y agoIt means it is difficult/impossible for startups to get additional lending
- more_corn 4y agoAll startups have a runway. Let’s say 12 months. You hit your metrics, hire, gain customers, go back to investors and get more money. Your valuation goes up, your shares get diluted (smaller slice of a bigger pie), you get another couple million and your runway resets. You do it again. Now imagine the capital is gone. Not just the investors you know, not just the ones you’ve heard of. There’s no capital to be had for anyone for anything. So your runway doesn’t reset when the money runs out you have to fire everyone and shut the company down. The line is hyperbole, meant to evoke terror and despair. Or maybe all the money dried up. Or maybe the answer is somewhere in between. (There’s still money, but it’s cautious money and half the startups in existence now won’t be in a year)