Concerns about high burn rates among tech startups are not new; they did not spring into being suddenly in the fourth quarter of 2021, the final three-month period of the most recent startup boom.
If you rewind the clock to 2014, investors were worried about tech startups losing too much money. Comments from Bill Gurley and Marc Andreessen from the period could be shared on Twitter today, and you probably wouldn’t notice that they are nearly a decade old.
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Did the startup market listen to the 2014 venture warnings concerning high burn rates and the potential, to summarize the a16z co-founder, for startups losing too much money to vaporize? Maybe a little, but I doubt that anyone views the 2014-2019 era as conservative when it came to startup spending.
Then COVID hit, and even more money flowed into venture funds, bolstering startup fundraising to record highs. Startups with newly minted 10-figure valuations snacked on nine-figure rounds and plowed through the capital quickly, sure in the knowledge that there would be another check waiting.
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Photo and Author: Alex Wilhelm