In reality, we see many examples that too much capital makes your startup unfocused and it’s a curse, not a blessing. When you get funds at the beginning it’s putting you in the wrong position of ‘spending’ money and not earning it. To minimize it as much as you can is a smart move that helps to build a healthy business. One that is earning money and not spending all of it. It sounds (too) basic but you will be surprised how many founders forgetting it after the raising the first round. You wish to start lean and mean and keep it for as long as you can.
Limited capital makes companies focused.
This is an important factor when you wish to build a business and make it profitable in limited time.
The main limiting factors for startups:
- The management team – Can the founders and other leaders can make the right decisions and drive execution that is focused and moving the needle to customers?
- Focus – It’s critical to focus on what to do and more importantly, what not to do.
Part of that, is keeping to play to your strength and not responding to other in the market and falling to play their game. You can go deeper on topic in Malcolm Gladwell’s book: “David and Goliath: Underdogs, Misfits, and the Art of Battling Giants” in a nutshell, you (as David) want to move the battle to your expertise so the odds to win will be in your favor.
- Time – You got funding and it’s buying you time to execute. If you won’t be able to reach the milestone you put to yourself, it might lead to a path you wish to avoid (e.g. more rounds and no profitability).
As Henry Ford said: “If you think you can do it or think you can’t do it – you are probably right”. It’s always easy to come up with excuses and ‘reasons’ for why: more of X and more of Y could have been useful, but if you are resourceful and got grit, you can win.
Knowledge, in this case, is half the solution.
Take ownership, focus like a laser and good luck!