Comments on: The New New Start-Up: No-Frills, Low-Costs

By: Jim

Jim — Sat, 20 Jan 2007 12:54:49 +0000

It’s not only about generating revenue and managing burn – but also about raising the “right” amount of venture capital at the appropriate times in the business’s life cycle. “Right” is tough to define but it has to be enough so that the company has enough time, payrol, capital, etc to create value (which should translate into an increase in share price) but not so much that existing shareholders & owners were unnecessarily diluted. The lead company in the article has raised $9M and is spending $200K per month – and if that spend-rate holds the company would have 45 months of runway which is way too much. So either the management took in too much money and accepted unnecessary dilution or the VCs gave an unnecessarily high valuation in order to be able to jam in an excessive amount of money (and continue to draw management fees for “managing” the money).

By: Mark Evans

Mark Evans — Fri, 19 Jan 2007 19:33:29 +0000

You’re right…and it’s just the right way to do business by focusing on what’s important and what gives you ROI.

By: Eric

Eric — Fri, 19 Jan 2007 19:05:23 +0000

I think that its just part of the new way of doing business in today economy. People are more cautious and the Internet and its start-ups have lost that late 90′s sparkle. Companies owe it to their investors and their employees to make money. This way everybody wins.