In reality, we see many examples that too much capital makes your startup unfocused, and it’s a curse, not a blessing. Getting funds at the beginning puts you in the wrong position of ‘spending’ money and not earning it. Minimizing it as much as possible is a smart move that helps build a healthy business. One that is making money and spending only some of it. It sounds too basic, but you will be surprised how many founders forget it after raising the first round. You wish to start lean and mean and keep it as long as possible.
Limited capital makes companies focused.
This is important when you wish to build a business and make it profitable in a limited time.
The main limiting factors for startups:
- The management team – Can the founders and other leaders make the right decisions and drive execution that is focused and moving the needle to customers?
- Focus – Focusing on what to do and, more importantly, what not to do is critical.
- Part of that is keeping to play to your strength, not responding to others in the market, and failing to play their game. You can go deeper on the 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 can’t 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 helpful, 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!
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