This week I received a somber update email from a founder. I’ve known him for years and supported him whenever I could. I didn’t invest in the company, but he keeps me on his update email list so I can track his progress.

This email said they’ve run out of cash. They’ve been trying to raise capital for months, with marginal success, and they’re nowhere near breakeven. Employees are being terminated.

I wasn’t totally surprised, but this was still sad to read because the CEO and his team have put years into building this solution. I believe the problem they’re solving is real and experienced by a segment of the population. But I suspect it isn’t painful enough for a material number of customers to happily pay to solve it. Said differently, this solution may be more a vitamin than a painkiller.

In an environment with abundant, cheap capital, companies building vitamins can raise capital. When capital is expensive and less abundant, these companies will struggle, and some will fail.