The last bit of runway has a way of focusing energy and attention on the things that matter. I want to find a way to get more companies to operate with that urgency sooner.
As a founder running a deep tech company that has faced this situation a few times, I can tell you that working with that level of stress and ruthlessness is unsustainable over the long term if you were already working with a minimal budget. One way I would recommend investors handle this would be to pledge a large amount of funding that will be invested and release the funding in traunches with strict milestones.
Thoughtful post. Some of this is also driven by venture building experience. First timers may not know what is a waste of time/money until they have done it a couple times. Having good early stage advisors to help minimize waste from the beginning helps, and often does what the "$250K effect" does without that constraint. But certainly lack of funds drives focus so this is a great point, and maybe there is a way to force that mindset in the context of a management team exercise.
These are all great points and a big reason why we're choosing to bootstrap until we have data to prove PMF. For most tech businesses, running experiments to find PMF should be pretty cheap, and having a bunch of investor money just gives you the freedom to waste it on things you don't need at that stage.
Not sure if you can talk about it, but I'd love to see a post about how getting into some portfolios (especially certain incubators that shall remain nameless) creates a pressure to spend some of your funding on products from other portfolio companies. I think this is an underrated factor in terms of burn rate (of course, the flip side is that your company will hopefully benefit from this dynamic eventually, assuming you're a B2B).
As a founder running a deep tech company that has faced this situation a few times, I can tell you that working with that level of stress and ruthlessness is unsustainable over the long term if you were already working with a minimal budget. One way I would recommend investors handle this would be to pledge a large amount of funding that will be invested and release the funding in traunches with strict milestones.
Thoughtful post. Some of this is also driven by venture building experience. First timers may not know what is a waste of time/money until they have done it a couple times. Having good early stage advisors to help minimize waste from the beginning helps, and often does what the "$250K effect" does without that constraint. But certainly lack of funds drives focus so this is a great point, and maybe there is a way to force that mindset in the context of a management team exercise.
These are all great points and a big reason why we're choosing to bootstrap until we have data to prove PMF. For most tech businesses, running experiments to find PMF should be pretty cheap, and having a bunch of investor money just gives you the freedom to waste it on things you don't need at that stage.
Not sure if you can talk about it, but I'd love to see a post about how getting into some portfolios (especially certain incubators that shall remain nameless) creates a pressure to spend some of your funding on products from other portfolio companies. I think this is an underrated factor in terms of burn rate (of course, the flip side is that your company will hopefully benefit from this dynamic eventually, assuming you're a B2B).