Food for thought: Startups, Innovation, and Entrepreneurship

Don’t become a fundraise addict

There have been numerous talks about the need for ‘patient capital’ specifically when it comes to backing deep tech founders. In fact, right here’s an article by venture capitalist Ann Lai, making the case for venture backable science projects: Why Those ‘Science Projects’ Are Actually Hugely Venture Backable

At the back of our minds, we get it. Researched-backed projects are hard work into the unknown and when proven right, bring true transformation, not mere optimisation, and that itself brings incredible benefits to all of us. MRNA technology is one that enabled the world to exit from the global pandemic faster than we could have hoped, and there are probably many other examples.

But becoming over reliant on fundraising can result in a larger problem for you and your startup.

Investors, after all, come with their own agenda whether it’s their LPs or for other reasons. This means it comes with restrictive clauses, there is less flexibility to run your startup like it is your own bootstrapped company, artificial timelines might bring in unnecessary stress for changing circumstances out of your control, and more.

San Francisco-based primary care startup Forward is case in point, demonstrating that raising another $100 million might not necessarily be the right way forward. The AI doc-in-a-box is revolutionary and has led to successful fundraising, but it wasn’t sufficient to avoid what came after, an extreme burn rate, according to Business Insider, that led to the untimely demise of this 8-year-old startup.

Perhaps once your startup starts making revenue, it might be worthwhile to be more introspective and consider the option to just hunker down and build rather than simply raising again. Being aware of other options helps to give you clarity to make the best decisions for your startup.

It matters who you invite to your board

Valuation shouldn’t be your only consideration metric when selecting your investor. Sometimes an adverse selection can lead to drastic consequences.

This isn’t all new but certainly a good reminder having chanced upon an old video on Elon Musk’s personal experience in choosing an investor with a higher valuation only to regret down the road.

Watch the video here: PandoMonthly: Fireside Chat With Elon Musk

Accepting VantagePoint’s offer turned out to be the worst decision for Elon. Just a year on, VantagePoint started to attempt to dilute Elon’s stake in Tesla, leaving Tesla poised for bankruptcy in December 2008. If not for Elon’s personal capital, Tesla wouldn’t be alive today and we wouldn’t see Tesla cars on the streets.

If even astute founders can make the mistake, much more the rest of us and this is a timeless lesson to remember: the VC-founder relationship is intense and over a long period of time and it is better to err on being more careful than making a wrong choice.

Interesting Reads:

Singapore took lion’s share of venture capital in Southeast Asia for 9M2024: S’pore firms captured $5.45 billion in venture capital in first 9 months of 2024 despite slump | The Straits Times

Sea holding on its own against bigger rivals in e-commerce: Sea’s Shopee turns first profit after fending off TikTok, Lazada | The Straits Times

Dubai’s tech ambitions: 'Incredible things outside Silicon Valley': Why tech start-ups are flocking to Dubai - CNA

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Two nuggets to end your year with, we hope you enjoyed the short read. Hit the subscribe for more content for 2025, see you soon!