Comment by mscuwa

How you raise money doesn't make a difference. What matters is how fast you can utilize your "engineering assets". More often than not startups don't sell anything (let's say "anything" is > 20% of developers' cost) in the first year, or even in the first 3 years. So for them it's not a problem, you simply carry forward losses until you start getting revenue, and at that point you have enough losses to offset those 80%. It doesn't work for companies which are lucky enough to make substantial (comparable to the salary) sales in the first year. It's like Ford built a new factory, made 600,000 F-150 and sold them and the factory is basically gone in one year, there is nothing left. Doesn't happen with real factories though and usually doesn't happen with startups, but there might be exceptions.