4 ms·
"As an investor that’s a no brainer. Hmm. Let’s see. Should I write off my $2.5 million or put in 16% more ($400k) to see if we can get to break even and maybe
by smoyer 13y ago
"As an investor that’s a no brainer. Hmm. Let’s see. Should I write off my $2.5 million or put in 16% more ($400k) to see if we can get to break even and maybe find more money and/or find our magic growth curve?"
That's the "sunk cost fallacy" (http://en.wikipedia.org/wiki/Sunk_costs#Loss_aversion_and_the_sunk_cost_fallacy http://en.wikipedia.org/wiki/Sunk_costs#Loss_aversion_and_th...). The $2.5M is already gone and so the ROI should be evaluated on whether the outcome is better worth putting in the $400K (while also looking at the opportunity cost).
- LanceH 13y agoIn the context of that point in the article I think he was just framing that 16% as easily being in the range of the previous investors. He was noting how that $400k would have some legs when augmented with sales and another $2.5+ million round wouldn't be needed.