I'm not generally a fan of having a list of repeatable "lines" that I roll out like some tired performer. But I often find myself telling founders that you can't save your way to greatness. This is a core belief for me. Here's why.
Time is the enemy of all great startup outcomes. If you're pursuing a huge vision, then someone else is eyeing the same prize. The company that gets to lead the market first will capture most of the value in that market. That's just how technology markets work: winner takes all or most.
Perhaps this is too abstract a notion for you if you're at the early stage and not yet thinking about global dominance. At the early stage, I often see companies that are behind on revenue targets, but feeling good that they're also well underspent against budget. They're managing cash wisely.
On the one hand this is great. The reason startups fail is that they run out of cash. You can always keep fighting and always recover from mistakes if you have money to keep going. On the other hand, investors don't invest in you for you to sit on that capital. That's not generating value.
Now, I'm not advocating that startups burn with reckless abandon. I am a frugal Scotsman after all. But I am saying that you need to move aggressively. Sometimes that means spending fast. Sometimes not.
Nothing moves markets and investors more than traction. Traction forgives all sins. The faster you can find product/market fit and then aggressively invest behind that, the more easily you will win the market and be able to fund your continued growth (in a virtuous cycle of customer wins and ever-increasing ability to raise follow on capital).
If you look at the funding patterns of market winners, you see that time between successive funding rounds compresses with each round. The companies just move faster and faster. They generate more momentum and get closer to the inevitability of winning the market with each round.
I recently was introduced to a startup that raised its series A in 2012. It has generated some really solid results with that round and been capital efficient. But my immediate question is why have they not raised follow on capital sooner? Why did they stretch that A round out so far?
Sometimes you need to stretch things out. Bill Gross of Idealab gave an excellent TED Talk on why startups succeed. The #1 factor of startup success in his considerable experience is market timing. So, if you know you're ahead of the market then you need to wait it out. But if that's not the case, then you need to move quickly.
If you're an investor then you know beyond any doubt that time is your enemy. Generating the same cash on cash return in three years is way better than getting it in seven years. Good things take time, but that time can be compressed by ruthlessly focusing on finding product/ market fit and helping your portfolio companies find their fundamental unit of growth and then scale that.
For all these reasons, I strongly believe that you cannot save your way to greatness. It's cheaper than ever to start something. But it's as expensive as ever to finish something in a winning position.