Can having too much capital be a problem?

Have less funding than your competitors? Good!

English: One Billion Dollar Artwork

English: One Billion Dollar Artwork (Photo credit: Wikipedia)

I often talk with young entrepreneurs who are struggling to raise money to keep their startup going. They are typically high achievers who have never failed at anything in their life. I often joke that running out of money isn’t failing: Failing is raising $100 million and turning it into $0. The funny part about capital is that having too much can be a problem just like not having enough, as Seth Levine says in this blog post. There is an optimum amount of capital for pursuing a given market opportunity. If the market is still developing, then additional capital is often wasted – or even worse: It causes the company to lose focus and pursue many different markets. The CEO’s job is to provide the right amount of capital at the right time.

Leave a Reply

Your email address will not be published.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