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I work at an unprofitable VC funded startup. We plan to be profitable soon, but so far we haven’t been. We’re not huge and not glamorous. The entire point of t
by habosa 3y ago
I work at an unprofitable VC funded startup. We plan to be profitable soon, but so far we haven’t been. We’re not huge and not glamorous.
The entire point of taking a VC check is to run your business at a loss while you grow. The idea is to jump quickly from $0 to millions in revenue instead of having that journey take years. So you hire good people, pay them well, spend on marketing (in some businesses) and take on customers at terms that are break even just to have customers at all.
You learn if you have product market fit but you may not learn if your prices actually sustain your business. And then you can either raise prices (hard) or fire people (hard) to get to profitability . Or just raise more VC money and “make it up on volume”
- beowulfey 3y agoI think this is the exact situation I'm asking about, so thank you for answering! It's a good discussion point. To me it seems like so many companies start like this, but fail to get past the profitability stage. I guess my question is, are these companies going about this the wrong way? Maybe starting with a big surge of funding to get off the ground is giving false hope to products or corporate strategies that just aren't sustainable. I'm wondering if starting small and letting things grow organically, slowly, is more effective overall in terms of success for businesses. I have no idea though. What are some examples of companies that grew rapidly with VC funding and eventually became successful, profitable businesses? Netflix, maybe -- anyone know others? (I'm showing my ignorance here, I'm sure there are many obvious ones!)