It's beyond me how a startup can drain 500K€ in 6 months.. Yes, he gives some details where the money went (mostly flushed down the toilet), but I just can't understand why a startup, that is generating little to no revenue, waste so much money.
500K isn't that much money if you're not supplementing it with revenues. 11 salaries burn cash fast if you're paying market rates, even if paying 5k per month per employee then just on salary costs you only have 10 months of runway. Thats nothing. This team should have been leaner and product focused with that 500k and their goal should have been a product that they could spin into a second round of funding.
The top salaries were roughly 3K€ per month. Officially and speaking for myself. Without the detailed accountancy we can only speculate about it.
We built a working software using Node.js and Chrome Extensions in less than 3 months, to reach that second stage of funding.
As our baseline was not clear, our market not proven and probably because of the investors suspicions, we never got an answer (well he had: "we'll see later").
I forgot to mention this product was based on scientific research about graph theories and user behaviours in an established society.
From science to market, another challenge as one needs to distinguish the scientific interest of a feature vs. a sellable feature on a business market.
Regardless of how much you have, you have to stretch that money for a longer runway than 6 months, especially in B2B. Even if you were selling stuff that turns everything it touches into gold, after 6 months you still wouldn't have gotten through all the sales processes to actual cash in bank, the B2B sales process simply doesn't work that fast.
Yep you are right, this is part of the wrong income/outcome balance. The Head of marketing said she could not handle the load so we needed to hire someone else. We were mitigated about that.
The hiring has been made against our will, and we could not prevent it to happen (again, 52% shares by the CEO, all the power in a unique pair of hands etc.)
The number of analysts is wrong as well: especially when you lack of customers. Hirings have been made in case of signing the huge contracts in the process of being signed.
An attempt to scale too early, with blurry indicators which made us thinking we eventually needed them.
Anyway, considering how much money was burnt every months, it would not have saved us much more than 1 or 2 extra months.
I think this is tight to the personality of the guys allowing the expenses. In that case, the "I want to make sure you don't need my money" investor advice makes a lot of sense: they want to make sure your head is not going to burn because of the euphoria effect. Yesterday you had 0, today you have millions.
On another scale, you have people unable to manage a daily budget. This is the same on a (wrong) business scale.
