Why Do Start-ups Burn Money?

WHY do investors put money into a start-up when so many of them just burn the cash, especially on non-vital things?

Many new ventures are unable to control the outcomes of their efforts, relying on several external factors to remain viable. So, they hedge their bets, which also means some of the money will be spent on seemingly non-essential products or services.

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Optimism And Reality

There is a sense of over optimism in start-ups. They are, after all, looking to deliver the next big thing that everyone must have.

W. Atelier, Keep It Going

Mike Hagbeck of Space Next Door says you must have a story to tell. But in this region, that story has to be told in a variety of languages. That means it needs to be customised for various markets, and that can be a costly endeavour.

But, you want to move your product or service, so you’ve got to bite the bullet and shell out to cover as many bases as possible. And everyone along the supply chain will present their invoice, which adds to the cost of setting up your business.

Keep It Going, Sharing economy

It takes a lot of resources to run a business. And if the barriers to entry are low, you can expect competition resulting in a fragmented market. So, timing and speed become important.

Watch the recent discussion at Keep It Going: By Design on the sharing economy.

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STORM magazine http://www.storm.sgorganises a regular discussions on topical issues under the Keep It Going (KIG) series.  Email kig@storm.sgif you would like to recommend topics or speakers, or would like to attend upcoming events. Our partners: US Embassy Singapore, Halia Botanic GardensVault@268.

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