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Jakarta Post

Start-up funding: Better prudent than sorry later

  • Istu Septania

  /   Tue, October 22 2019   /  02:18 am

Azhar Abdul Wahab (JP/Arief Suhardiman)In this digital age, heavyweight investors race each other to become the first backers of high-profile start-ups, showering them with eye-popping amounts of money. Flush with cash, imprudent start-ups usually spend a lot of the money to lure customers with big discounts. The investments, which can continue flowing in for years, are mainly spent on getting customers and research. In reality, however, most tech startups continue to struggle to make a profit. As the companies burn through money to attract customers, investors patiently wait for their share of profits.This common practice receives a critical assessment from Azhar Abdul Wahab, a businessman and former banker, who dismisses it as “cash burning”.“One day the investors will ask them, ‘So where’s the return I’m entitled to?’” he says.He recalls the credit card business bubble...