For start-ups, cash is king. Again

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SAN FRANCISCO (NYTIMES) - Mark Frank, who runs a health technology start-up called SonderMind, had planned to wait until the end of 2020 to raise more money for his company.. Read more at straitstimes.com.

SAN FRANCISCO - Mr Mark Frank, who runs a health technology start-up called SonderMind, had planned to wait until the end of 2020 to raise more money for his company.

In the first three months of the year, Kruze's clients had an average cash balance of US$3.5 million. By September, that had increased to US$4.5 million, he said. And start-ups that began the year burning US$260,000 a month had, on average, reduced that to US$230,000, he said.Stockpiling cash is at odds with the model of most venture capital-backed start-ups, which typically raise piles of money to spend on growing faster. Many investors are now pushing their companies to turn a profit.

Mr Ben Parr, president and co-founder of Octane, a customer service software start-up in San Francisco, said investors had been asking him how much money his company was spending and how long it would take to break even. Now the fear factor should be higher, said Mr Micah Rosenbloom, an investor at venture capital firm Founder Collective.

"We've definitely gotten more conservative," Ms Huang, 39, said."We see storm clouds on the horizon." Venture fund raising is often affected by stock market sentiment, said Mr Horowitz of Icon Ventures, who has worked in venture capital for four decades.

 

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