I agree. 1) because the company took outside money does not decrease your skin in the game (if substantially all of your net worth was in the company before a funding round, and it was all primary capital raised, then you’re still “all in”). 2) when people are over invested exposed, their risk tolerance typically goes down not up (even if the payoffs have high expected returns)

I think there is a much bigger flaw in the version of the argument stated in the article.

The argument boils down to "here is a bad thing about raising capital, here is a good thing about not raising capital, therefore not raising capital is better".

But there are other pros and cons that this argument is ignoring, so it is not logically correct.

I also think the version in the article is an unfair representation of the original blog post (https://ensorial.com/2020/dont-raise-money/), which explicitly says

> I’m not suggesting that there are never reasons to take outside investment. Obviously there are. But, we should recognise that doing so comes with significant trade-offs and difficulties that mean it shouldn’t necessarily be the default.

(I see that @ilyt already posted this exact quote.)

Great read. The real problem with "the skin in the game argument" is that it's a matter of opinion, but one opinion is more likely to be right.

>> Raising capital to do a startup reduces skin in the game (you’re spending other people’s money, after all).

The more likely correct take is as follows. Note that I am changing just one word.

The right version:

>> Raising capital to do a startup INCREASES skin in the game (you’re spending other people’s money, after all).

The naïve take seems to place no value on reputation (ability to get more financing in the future).