Entrepreneurial godfather of Silicon Valley how to deal with the sudden squeeze

Abstract startups fail to go through a special stage: a lot of money, an increase in monthly losses, a stagnant income.

technology news December 9th, Tencent, founder of Silicon Valley incubator YCombinator is known as the "godfather of Silicon Valley entrepreneurs" said Paul · Graham (Paul Graham) recently published Bowen, for start-up companies how to deal with the matter of vital importance "fatal extrusion suggestions. The article is as follows:

many start-ups in the last few months before the failure, will go through a special stage:

although they have a lot of money in the bank, but the loss of each month is increasing, while the income is almost no growth. In general, start-up companies have 6 months of development. In a more brutal way, they had 6 months to prepare before the final bankruptcy. Startups want to get more financing from investors in order to avoid this particular stage.

the last sentence is very critical. The founders of startups tend to self deception, investors are assumed to their business very interested and willing to provide more funds. But in fact, the first time to convince investors have been difficult, and the second time to get funding from investors more difficult. The founders of the second seek financing is often based on three factors:

first, the company now spending more than its first financing;

second, investors have higher standards for the companies they have invested in;

third, the company is now beginning to fail.

in the first financing, the company will not be able to succeed, because it was too early to predict the results. But now ask whether the success of the business, the default answer is failure, because this is the default result of this situation.

I call the article at the beginning of the fatal squeeze". I have tried to resist the creation of new phrases, but by the name of the above, I was able to make myself aware of my situation in the presence of the founders. One of the reasons why "lethal squeeze" is so dangerous is that it is self reinforcing. Founders tend to overestimate their chances of getting financing, but also to gain confidence in their products, resulting in a lack of confidence, which further reduces the probability of their financing.

now, you already know how to deal with the "deadly squeeze", obviously, the best way is to try to avoid it. Y Combinator cautioned that the founders of financing, they need to be treated as the last straw for every financing. Because of the "squeeze squeeze" self reinforcing features also have a crack program, that is, the more you need to invest more, the easier it is to raise funds.

what would you do if you were stuck in a "squeeze squeeze", first of all, to reassess the possibility of raising money?. Now >

Have any Question or Comment?

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent Comments