Nakache: Raising too much early capital forces dangerous premature growth spending
Patricia Nakache · 20 VC 080: How VCs Can Differentiate Themselves with Patricia Nakache, General Partner @ Trinity Ventures · Oct 19, 2015 · at 15:25
Patricia Nakache, General Partner at Trinity Ventures, explains how over-fundraising early creates high investor growth expectations that pressure founders into premature scaling.
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“If you raise, you know, say, say you're, you know, you just launched your product, and you have, you know, four or five months of data, and it all looks positive, but it's all limited and you raise a lot of money, The expectations for growth are, from the, from your investors are going to be quite high and so that is going to encourage you to spend more, to chase that growth, even if that growth might not be, say those customers aren't retaining or if there's some issues with the product, and so you don't, it doesn't give you, if you raise too much, it doesn't give you is much leeway to slow down.”
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