The Pitfalls of Too Much Capital

Too much capital may seem like a problem every company would like to have, but there can be drawbacks associated with a high level of capital.

If your company only has a few hundred thousand in the bank, odds are that your company and leadership will be intensely focused on revenue. But if you raise the next million dollars, your attention will be diverted from sales to infrastructure, recruiting and improving your products. These are all important, but if you get too distracted from what counts – getting more customers – that extra money in the bank is no longer helping your company develop.

As more capital comes in, don’t lose focus on the essentials. If you only had $5,000 in the bank, you would spend 80 percent of that on getting customers. Ultimately, nothing changes a company’s valuation more than increasing customers and revenue, so there is no reason to change your core focus on customer acquisition as you grow.