Sam Altman, the president of storied startup accelerator Y Combinator, has just gone on an epic tweetstorm about the lack of frugality in tech startups.
Certainly, the amount of money coursing through tech is starting to get ridiculous. As more money gets raised, there is a kind of arms race for talent and resources. There are now over 100 private tech companies valued over $US1 billion. And as CB Insights noted earlier this year, the amount of $US10 million series A funding rounds is consistently increasing:
But not only has the amount of funding raised per round increased, there are now even more rounds. And the time between the rounds is decreasing, implying startups are burning through cash.
The funny thing is, this is as much a problem for Y Combinator, Sam Altman’s outfit, as it is for anyone. As this graph from Mattermark shows, the size of the rounds and the amount of rounds is skyrocketing for Y Combinator companies too.
The big takeaway from all this comes midway through Altman’s tweetstorm. With the arms race for talent driving up the cost of engineers, it’s best to make sure at least one of the founders is technically inclined.
Read the entire tweetstorm here.