It's a cliche, but it's true: investors want you to go big or go home. Their outcome is binary. The IRR they see gets killed if you take 15 years to exit instead of 5. As an entrepreneur, you may very well make life-changing money by riding it out and making your vision work eventually, but that's not how (most) (professional) investors measure success.
Which is why you should think long and hard before you raise money about whether you WANT to deal with that misalignment in your life.
No doubt, raising money is viewed as cool (viz. entreporn) and may ease your path in other ways, but it introduces certain physics to your business.
Nine, ten...the important consideration is the fallacy of assuming that increasing spend provides a commensurate yield in productivity and output.
The more appropriate analogy would have been Brooks's Mythical Man Month.
Seriously?
Try doing a startup with a hardware component without up-front funding.
Then again, HN is very noddy-apps-oriented.
This is a lesson I learned from Vinod Khosla - who by most metrics knows what he is doing. In nascent markets user acquisition costs rise quickly. In network effect businesses, switching costs are high.
So should you lower your burn? Not necessarily. Ask yourself just as often "should I increase my burn."
Put another way, it doesn't matter what your burn is if you've got your rockets pointed in the wrong directions.
Maybe another reason to bootstrap/self-fund with consulting (what I'm doing right now).
Is this true? I'd have assumed that most seed funding is provided by smaller investors who are investing personal funds while venture capital is using institutional capital.
We're now year three+ after the general market downturn, which means deleveraging, wealth destruction and a preference for liquid asset classes (i.e. look at Treasury yields) shrinking the availability of institutional capital available for VC funds. And isn't this exactly what we are supposed to see in this situation? Smaller and knowledgeable investors pump up the bottom end of the market because it offers a much better return than sticking cash in anything else?
Regardless, when the problems are interesting and hard enough, we find that our clamp on spending is a really great recruiting filter. The people that join the team are truly passionate about our product and technology. It's painful at times, but spoiled grapes don't taste very good either.
Pivoting requires, among other things, money.
And I am not trying to be cute here. It is properly the single most common tradeoff here - you sell your hours for pay at a company, then buy a frozen pizza because you don't want to make it at home, then clean your own house because a maid is too expensive but outsource your taxes because they are so complex and would take you ten times longer to do, you drive a car because commuting by bike is too slow and the buses don't come by that often.
Time can be brought (heck that is kinda what you are doing with your start-up because a successful start-up can mean you don't have to work at a job again, ever).
