Is VC funding, on balance, more of a help or hinderance to the success of a company?
To try and find out, in a new article for TechCrunch, Founder Collective’s Eric Paley looked at 71 tech IPOs from the last five years.
As Paley says: “The conventional wisdom in the startup community is that when building the very best companies, more capital can be leveraged to accelerate even greater growth.
“But does this “go big or go home” approach stand up to scrutiny? In the best case scenarios, do companies that load up on venture capital actually outperform those that more efficiently deploy capital?”
The research looks at the IPOs of companies like Facebook, Twitter, Veeva and Square, studying the correlation between the amount of VC funding they received and the outcomes & success they saw.
The very impressive in-depth study reveals that companies with lots of VC funding don’t “meaningfully outperform” their efficient peers prior to the IPO, and “actually underperform” after the IPO.
Read the fantastic in-depth article here.