Worry about high burn rates in tech startups are not new; they didn’t come on suddenly in the fourth quarter of 2021, the last three months of the most recent startup boom.
If you rewind the clock to 2014, investors worried that tech startups would lose too much money. Notes from Bill Gurley and Marc Andreessen from that period could be shared on Twitter today, and you probably wouldn’t notice that they’re almost a decade old.
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Has the startup market heeded the 2014 venture warnings regarding high burn rates and the potential, to sum up the co-founder of a16z, for startups losing too much money to evaporate? Maybe a little, but I doubt anyone sees the 2014-2019 era that way conservative when it came to start-up expenses.
Then COVID hit and even more money poured into venture capital funds, driving fundraising for startups to all-time highs. Startups with newly minted 10-digit valuations snacked on nine-digit rounds and quickly plowed through the capital, confident that another check would be waiting.
