Startups beware: Too much investment too soon can hold back innovation

News By: Martin KellyApr 3, 2018

For most start ups, receiving investment is the lifeblood that enables them to not just exist, but grow.

But is too much investment a problem? 

Martin Kelly, CEO & Co-founder of Infectious Media, was asked by City A.M about the problems that startups can face when investment is involved.

Here's what he had to say...

For startups, cash flow is always front of mind.

This focus is necessary given the balancing act many perform on a daily basis. So my suggestion will sound surprising.

Borne from experience, I think too much money in the early stages of a startup’s life can be an impediment to valuable innovation. I would suggest businesses can benefit in that intense beginning phase from a period of austerity that sharpens appetite to make sure the idea, and the business formed around it, is sufficiently viable to survive and flourish.

This can be seen by comparing the progress of US and European SME’s in the industry in which I operate – ad tech. The sector has received a great deal of attention in recent years, as it provides the technology which powers the ads that continually flick across our screens.

Digital advertising is the fastest-growing type of advertising, so no surprises that the ad tech market is also booming. There have been a variety of big-ticket acquisitions by large companies over recent years and plenty of investment by financiers eager to find profitable homes for their cash. 

But it’s interesting to look at how different patterns of investment (in quantity and timing) tend to then pan out for those businesses.

Read the full article here.

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