It is turning into a problem of plenty for some startups as venture capital has been flowing in fast in recent weeks. The rapid inflow of funds is leading to some significant problems for certain startups.
Several founders and top executives of startups have brought up this issue during a discussion at Half Moon Bay in California.
Tejas Konduru, CEO and founder of Via, a mobile startup says that the pace of fundraising ensures that the initial investment or the seed round takes just weeks to finalize.
The series A round of funds comes in within a week, while it takes just a couple of days for B round funds to be finalized. This makes it theoretically possible for a startup with the number of employees in single-digit to explode into a large company employing hundreds of employees, within a month.
Venture Capital Pump In Money And Have High Expectations In Return
But along with the funds come high expectations from the venture capitalists who expect fast and high returns.
There is an all-around expectation from the venture capitalists of high growth, high performance, better products, all with a team that has been newly formed and given the pandemic, distributed geographically.
Startups are under pressure from venture capitalists to hire fast from among workers working remotely.
The venture capitalists try to force startups to expand at an abnormal pace while the startups try to profit from the sudden bounty coming their way.
Christine Tao of Sounding Board, a coaching startup says that recruits have to get used to working in a new environment with a hectic schedule and high expectations. They need to understand that rapid change is normal. One advantage that startups have is they are flexible and can be experimental.