Recent Series A investment rounds in the tens and hundreds of millions are a "worrying trend" that "creates the wrong incentive structure for long-term success" according to digital health venture capitalist, Skip Fleshman. Following large Series A rounds, entrepreneurs are often tempted to overspend, as VCs pressure CEOs to spend their investment to start generating returns. The problem is compounded by an industry where startups have been forced into mergers or acquisitions because they can't raise enough money from investors to keep going. Mr Fleshman urges VCs not to make the same mistakes with digital health companies as they have done with technology companies, and keep the Series A rounds to manageable sizes.
Recent Series A investment rounds in the tens and hundreds of millions are a "worrying trend" that "creates the wrong incentive structure for long-term success" according to digital health venture capitalist, Skip Fleshman. Following large Series A rounds, entrepreneurs are often tempted to overspend, as VCs pressure CEOs to spend their investment to start generating returns. Another mistake made by well-funded early stage companies is to start selling before they have "viable sales channels" and a "scalable sales process". Mr Fleshman urges VCs not to make the same mistakes with digital health companies as they have done with technology companies, and keep the Series A rounds to manageable sizes.