Sean Parker recently stated that small startups are ridicously over-funded where talented entrepreneurs start their own companies that don’t go anywhere resulting in a serious talent drain among bigger scalable companies. My buddy Michael Eisenberg similarily related to how that is negatively affecting the Israeli tech ecosystem by recommending non-scalable two-person startups to give up and joint bigger and more succesful companies going somewhere but having problems in attracting talented engineers.
My take on this is that both the investors and the founders of these small startups need to have an honest discussion of where things are going and act accordingly. The big problem here is that too many investors tend to follow up on an initial investment and thus keep the illusion of potential success alive even though the writing is on the wall…
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