$7m actually isn't a whole lot, especially if they hired a (larger) engineering team. Assuming their cali based, that's easily 150-200k per engineer, a team of 20 easily eats through that. Idk the specifics, but I don't the organization was fradulent, it could also be that they're going commercial and no longer want to maintain their oss stack
reply150-200k is also just the employee’s salary, the actual cost to the company is significantly higher, you need to multiply that by something like 1.5 to get the fully loaded cost, people are expensive!
reply20 engineers would be incredibly aggressive growth for such a young company with that amount of capital, no?
replyThe real number is probably closer to ~13 engineers, because it costs a company the worker's salary _again_ for benefits, payroll taxes, etc., etc.
replyOur team was much smaller. We didn't spend all the capital.
replyTokenmaxxing makes startups even leakier if they don't find token traction.
replyif you hire 20 engineers with your seed round you are either very confident you'll be able to use them to justify another raise soon
replyor you're incompetent
> very confident you'll be able to use them to justify another raise soon
replyThat is indeed how the VC funding game is played. If you don't raise another round, you are dead anyway, so you spend down your seed round to try and justify that following round...
I thought ai was writing all the code. What do they need engineers for?
replyWe raised in 2024 and only burned through ~$3m of it, mostly on salaries to support a small team.
replyAnd AI tokens
replyThat would be a lot still. That’s a lot of money.
replyI’d bet on extreme irresponsibility.
Those Claude tokens are not cheap you know /s
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