Tome raised $81M at a $300M valuation and shut down at $4M revenue

Transcript

So we are actually adding comparison pages to our product and I wanted to share you a story about Tome. So Tome was a company who raised $81 million in venture capital and they shut down last year. I think they survived for a few years only, around two, maximum two years. And what I wanted to share you by this is they had a valuation of $300 million at once. It was founded in 2020 and they raised a lot of money in 2023. They tried to grow it. Their maximum grew to $4 million revenue. But of course, you can understand 4 million out of 43 million, which has been invested in a total of 81 million. It was not viable and they did not have, they removed AI features for not paying customers. They did a lot of things, but then it was shut down. Through this story, what I want people to understand is you don't always should raise funding for your company because raising funding, while it sounds exciting and the opportunity is there that you get a lot of funding and more. It comes with a baseline increased. So what do I mean by baseline increased? Well, if you're doing a bootstrap business, whatever profit you do, that's a profit, right? If you're doing a bootstrap business, even if you make 10 lakh, 20 lakh, that's a healthy business. Okay, you can survive. You don't have any issues. But if you build a business which is raising $81 million and then you're only able to generate a yearly revenue of $4 million, the investors will want to get up. And once that happens, the company shut downs in less than a year. So my journey of building products for last five years has been very focused on trying to build a bootstrap company only and not preferring to go into the venture route. Because when I go there, my baseline will increase a lot and it is very hard to keep racing to compete. And while you do see the examples out there, which has achieved good, but that's literally numbered. On the other hand, the successful business, which you'll realize in the back end, are way million. There are many people who are making crores, working, having two to three, four people literally running some small businesses while you're only hearing about Shark Tank.