Early-stage startup founders must’ve often heard from investors/ advisors to build runway for at least 18 months when fundraising. Yet, quite a few founders plan for much less. “We will raise Series A in 9-12 months” is a risky strategy, usually driven by an attempt to limit dilution.
There is a simple reverse-calculation to justify a minimum 18 month runway.
The past 2-3 years have been a golden period for the Indian startup ecosystem. The exponential growth has slowed a little only in the past few months, as it has globally. Steady growth and positive macro-economic factors since 2008 created a huge opportunity that a few smart entrepreneurs spotted early. Their success has created an environment where entrepreneurs are no more outcasts, but are instead the rockstars.
In parallel, the local angel investing ecosystem has boomed as well. As a result, many investors who aren’t close to the startup ecosystem are beginning to invest in startups. Sometimes, they do it without understanding the associated risks.