I’m curious to get your thoughts on the biggest challenges VC-funded startups are currently facing. Is it:
- scaling too fast?
- maintaining cash flow?
- pressure to meet growth expectations?
or something else entirely?
I’d love to hear from both founders and investors about the main pain points and how they’re navigating them in today’s environment.
What do you think is the most overlooked issue?
Are there any practices from bootstrapped startups that could be copied?
What are the biggest issues VC funded startups are facing?
byu/Sellific inEntrepreneur
Posted by Sellific
10 Comments
a lot of them start pushing lifestyle instead of actually building products
Most of them post on Reddit for their homework answers instead of doing it themselves.
Bro, as someone who’s been lurking in r/startups and r/entrepreneur for years, let me drop some truth bombs about the VC-funded shitshow:
1. **Cash burn is insane**: These mfers are burning through cash like it’s toilet paper. “SaaS Valley of Death” is real, and it’s claiming victims left and right.
2. **Scaling too fast = death**: Lmao, these startups are like that kid who chugs a whole bottle of vodka at their first party. Slow down, idiots!
3. **VCs want unicorn growth**: These greedy bastards want 1000x returns yesterday. No pressure, right? 🙄
4. **Funding’s dried up**: Remember when VCs were throwing money at anything with “AI” in the pitch? Yeah, those days are over.
5. **Founder-investor drama**: It’s like a bad marriage. “You don’t understand me!” *slams bedroom door*
The most slept on issue? Founders and investors need to actually talk to each other. Wild concept, I know.
What can these VC puppets learn from bootstrappers?
* Stop jerking off to vanity metrics and focus on actually making money
* Tell the VCs to back off and let you run your own damn company
* Stop pissing away money on fancy offices and start being cheap af
TL;DR: Find the balance between “grow or die” and “don’t be a dumbass”. Thanks for coming to my TED talk.
I think that pressure from someone external to the company’s main values and who is motivated by its profitability is surely one of the most complicated things to manage.
I’ve heard from a few friends who have raised multi-million dollar seed rounds that they can never raise again (haven’t grown enough), but are profitable and slow growing. Problem is, they aren’t going to grow beyond an exit price similar to the amount they raised for many many years.
So they’re basically in a dead zone. If they sell the company at current value, all the money goes right back to investors (VC money is always first out). If they keep grinding, they may never be able to cash out beyond the $4M-5M they raised during Covid. And Series A funding is super hard to come by.
So they basically are stuck at a company that would have been great bootstrapped, but are instead pulling a weak VC-backed salary, hoping to grind out enough MRR to justify some kind of exit of at least $10M where they’d make a million or two after payouts to VCs/Cofounders/IRS. The biggest issue for VC-backed founders right now is sunk cost fallacy imo.
If your taking VC funding there are return expectations, almost every startup CEO I’ve ever met had absolutely no idea how to meet those expectations.
Most of the time? Those expectations were fundamentally unreasonable given the idea they were backing. You want a 25x return in 3-5 years?
Sure, I want a blue and purple pony and superpowers . Guess we’re both going to be disappointed.
The growth? Is a lie. Most customers won’t pay the true cost of your service. They’ll pay the $15 a month introductory rate but try and bill them for the $35 real cost ($20 subsidized with VC money) and that’s a hard pass.
The end result? No one is happy and you pray for a soft exit where your financial backers get ten cents on the dollar and founders get 💩 but it’s better than being worthless.
Even Moderna isn’t worth anything like it was 3 years ago. You pick your exits very carefully in these types of companies and being employee < 10 is a much better deal IMOP than being the founder
maturing into their business model and brand, before growing carefully.
This post was very necessary thanks OP. I needed it
Maintaining cash flow and scaling too fast are huge challenges, especially under VC pressure. One overlooked issue is the constant need for data-driven decisions. Ive found using Afforai helps streamline research and citation tasks, making the process more efficient and informed. Bootstrapped companies excel at resourcefulnessno wasteful spending, which can be a valuable lesson.
As soon as you get VC funding you are pressured to make decisions optimized for an exit that the VC needs within a specific timeframe. They don’t care if you fail, because they are trying to win 10% of the time finding unicorns, not 100% of the time finding stable companies.