Post #3420116
2026-06-24 16:18 UTC
@gabrielesvelto@mas.to This looks like a pretty expected graph for startups to me. Holding cash is expensive, and a startup typically believes - rightly or wrongly - that they can buy revenue with it, and by extension a higher valuation. You'd expect cash to drop dramatically when they think raising more is expensive at their current valuation vs future.
Now, of course you'd *also* expect it if they're struggling to raise and struggling to reach profit.
But you can't tell from free cash flow alone.
Replies (1)
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@vidar@m.galaxybound.com 2026-06-24 16:22
@gabrielesvelto@mas.to Put another way, when I worked at a VC, our modelling indicated that it'd be near optimal for a startup to almost run out of cash every 12-18 months, as long as you had reasons to be confident your valuation was going in the right direction - short cycles of nearly running out of cash correlated with higher returns. Of course, it also correlates with risk, so it's not that none of these companies will fail - odds are many will.