One of the least intuitive aspects of a startup is knowing when and how to spend money in the pursuit of success. The answer is nuanced.
The first mistake startups often make is “premature scaling” meaning spending money before a company can use it productively. This was documented with some academic research by the Startup Genome, which should be required reading for any entrepreneur. Companies that spend money before being ready to scale will likely waste that money.
Read more of Kate’s thoughts on to when to scale at The Accelerators, a WSJ blog of startup mentors discussing strategies and challenges of creating a new business.