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Chicken-and-Egg: Money Problem

While listening to Vlad Tenev co-founder and CEO of Robinhood on the ‘How I Built This’ podcast I heard an interesting story about the chicken-and-egg money problem.

He says when they were getting ready to launch Robinhood around 2013 they first had to get a regulatory license but in order to get that license, they first had to prove that they had money in the bank that would give them enough runway for a year.

So what did they do? They went to investors to try and raise that money which they had calculated to be about a million dollars.

Now the chicken-and-egg money problem comes in here, investors weren’t willing to invest before they(Robinhood) had the license but they couldn’t get the license without the money.

This is a problem I know too well, you have investors who want to see a working prototype and a factory setup before investing but you can’t get to that stage without the initial investment.

This a serious money problem many start-ups and founders face all the time and something’s got to give, chicken or egg.

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