Nakache: Ramping burn rate before product-market fit wastes capital
Patricia Nakache · 20 VC 080: How VCs Can Differentiate Themselves with Patricia Nakache, General Partner @ Trinity Ventures · Oct 19, 2015 · at 14:10
Patricia Nakache, General Partner at Trinity Ventures, discusses common red flags in early-stage startups and capital allocation strategy.
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“If the company has not yet reached a stage where there's product market fit and yet the burn rate has been ramped up, To me, that's a yellow flag, and it's interesting, you know, it's one I'm thinking about a lot today in the context of the current environment, because there has been quite a bit of capital available to early stage companies, and so companies have raised probably more money than they might, than they would have in the past at a similar stage, and therefore ramped up their burn rates, and I think the wiser entrepreneurs who realize that you know, if you put the pedal to the metal from a burn perspective before a company has achieved product market fit you know, it's very possible that you're, you know, you're not using that capital wisely.”
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