The little leaks that drown early-stage startups — and how to plug them before they drain your momentum.

Photo by The Jopwell Collection on Unsplash

After a brief call with the hotshot New York lawyer, I was pumped about my next move: I’d wire him the $10,000 retainer, and we’d be halfway there. Okay, maybe a quarter of the way. But hey, at least I’d have the professional assurance that I could legally launch and operate the tech sweepstakes-meets-social network startup I’d planned to pour my life savings into anyway.

At the time, being 22 and lucratively employed on Wall Street making my first 6-figure salary, the startup world was my secret oyster, and I had no qualms about funneling my W2 income directly into my billion-dollar idea. To be honest $10k didn’t seem like that much. Neither did $25k, nor even $50k. (Spoiler alert: I’d spend more than double that on my first failed venture alone, but perhaps that’s the sting we need to acquire a bit of entrepreneurial discernment, a.k.a. a reality check.)

But unless you’ve recently come into a large sum of cash, you probably won’t be quite as financially reckless as I was. That said, I see it all the time: Aspiring founders with much more limited financial reserves than I had blowing big buckets of potential runway, while assuming it was “the only way”.

Ironically, though it’s been over a decade since I made those early 6-figure blunders, and inflation has been far from mild, I guarantee you I could stretch my entrepreneurial runway at least three to four times longer these days than I could back then. How do I know? Simple: I’ve done it, and I’ve done it multiple times across different industries with entirely different business models and customer profiles.

I’ve bootstrapped ventures that cost me nothing but time, and I’ve started others that swallowed six figures before their first dollar came back. The wild part? The gap in outcomes wasn’t always tied to how much I spent — it was how thoughtfully (or wastefully) that money was deployed.

If you’re a first-time founder with a $25,000 runway, it can feel like a fortune… or fumes. Unfortunately, most founders unintentionally treat it like monopoly money. That first chunk of startup capital becomes a blur of “must-haves,” “smart investments,” and justifiable expenses — until you look up three months later with nothing but a sexy website, a drained bank account, and no traction to show for it.

Let me save you the trouble (and the bill): Here are the most common ways founders quietly waste $25K in the early days of their startup, plus the strategies I wish someone had handed me before I made these mistakes myself. And to those who say $25K isn’t enough capital to make a dent of progress, I’d say you could benefit from this article most of all.

1. Overbuilding Before There’s Any Demand

This is easily the most expensive mistake on the list. If you’re building a product that hasn’t been validated with real-world interest (read: customers asking for it, trying to buy it, or hacking their own version of it), you’re gambling with your runway.

I once spent over $80,000 building a sleek, custom social app. It was beautiful. It worked. It was ready to launch! And no one cared. Well, let me clarify: I blew all my budget building the product itself, so I didn’t have enough money left over to market, educate, and make them care.

Why? Because I spent the money building what I thought people wanted instead of proving demand with a scrappy MVP first. Had I mocked it up in Webflow or used no-code tools to test user behavior, I could’ve saved months and tens of thousands of dollars. To be fair, this was before Webflow and most no-code tools began… At the least, though, I could have test-marketed an opt-in landing page, but I so believed in keeping my brilliant idea stealthily under wraps until ready to launch, and I did so to my own detriment, dooming the venture before it even got off the ground.

Lesson: If your product is pixel-perfect before you have proof of demand, you probably spent too much too soon.

Any exceptions? Always! Healthcare, safety, financial, and other highly-regulated industries can pose exceptions in which there is no super-cheap way to legally launch or beta test a product, but finding some proof of demand is typically still obtainable pre-capital raise.

2. Paying Full-Time Salaries Without Revenue

When founders pitch venture capitalists, one of the biggest expense categories they often budget for is “team”, also known as full-time salaries for the dozen(s) of subject-matter experts they’ll hire to run each department. You’ve got the head of marketing, the industry veterans, the tech experts, the product managers, perhaps some HR, finance, and other admin roles, and before you know it, you’ve committed a few million to salaries alone. Therein lies the road to accelerated burn, and this alone may dictate the longevity of your startup.

As someone who’s hired more than a handful of subject matter experts for roles ranging from tech to legal to marketing to product, then fired them all and replaced them with myself and contractors, I promise you it can be done (successfully). If you’re pre-revenue, you should get comfortable wearing as many hats as you can confidently rotate on a weekly basis.

Founders often feel pressure to act “legit” by building a team early. But unless you’ve already got recurring revenue and predictable demand, it’s smarter (and cheaper) to use contractors or project-based hires until you really need someone full-time. And even then, ask yourself: Is this role tied directly to revenue or product delivery?

If not, wait.

3. Spending on “Branding” Instead of Validation

Listen, I love good branding. And if you’re starting a fashion label, beauty line, or high-end consumer product, maybe the design is the product. But for most startups, “branding” becomes a time-sucking excuse to avoid testing.

I once advised an early-stage venture who’d spent nearly $15K on a logo, photography, packaging mockups, and a gorgeous landing page — before they even had a working prototype. The result? Their brand outpaced their actual offer, and customers felt confused (or misled) when they got a “beta” experience wrapped in a luxury package.

To their credit, these founders were eventually able to turn things around without ever positioning themselves as a low-tier or discount brand, but they could have spared themselves a lot of headaches, chargebacks, and angry customer feedback by prioritizing the product’s utility over the branding appeal.

If your brand promises more than your product delivers, you’ve set yourself up for disappointment and churn. Flip it: Deliver real value first. Once people are buying, then brand the heck out of it.

4. Overpaying Agencies That Underdeliver

Here’s the cold truth: Most agencies are built to service companies that already have product-market fit, healthy margins, and clear targets. If you don’t have any of those yet, you’re not their ideal client — but they’ll be happy to take your money and tinker away.

I’ve paid five figures to ad agencies, PR firms, and content shops that promised traction but never truly understood our product, audience, or goals. We handed them the keys to our monthly budget because we thought general marketing expertise could replace tailored industry-specific strategy. It can’t.

Want to outsource something early? Fine. But get clarity first. What do you need? What does success look like? If you can’t articulate those things in a single sentence, you’re not ready to hire for it. Furthermore, if you haven’t tried it yourself, do that first. You can’t knowledgeably appreciate the quality or cost-effectiveness of an agency to execute a task you’ve never done.

5. Paying for PR Before Product-Market Fit

Ah, the allure of press. Nothing feels more validating than seeing your startup in a glossy headline — until the bump fades and you realize… no one converted.

It sounds impossible, right? It must have been just my luck, a bad month, or a small, far-from-prestigious media outlet, right? Wrong — and it isn’t just my experience or a rare or unusual incident. I’ve both experienced and witnessed the shockingly underwhelming after-effects (leads generated and purchase conversions, or lack thereof) from some of the most prestigious, well-known, highly-read publications nationally, as well as industry-specific.

Here’s what I’ve learned: PR is good for credibility and bragging rights, but the more well-known a publication, oftentimes the more generic, and thus, the lower the lead generation and purchase conversion rate. On the flip side, the underwhelming consequence of getting featured in an industry-specific publication is that, in many cases, the primary readers are fellow industry peers and businesses, not necessarily the end consumers, themselves.

Regardless, the few times I’ve seen PR features exponentially blow up a startup’s sales, it’s been short-lived, buying them a bit of extra cash flow and a few more months to figure out a more sustainable method of profitable lead generation and sales.

6. Overinvesting on One Marketing Channel

Many first-time founders think ads are a shortcut to success. As long as you pay enough, you simply can’t fail, right? If it walks like a chicken and it talks like a chicken, you’re probably delusional because chickens don’t speak English. So yes, believing pay-to-play marketing (ads) can’t fail is verifiably delusional, as I learned the very expensive way.

In one of my high-ticket niche-specific e-learning startups, we scaled up to $700 per day in ads (and a profitable CAC), thinking we could optimize it down with scale and targeting. We never did. Why? On the way to optimizing those ads, the very social media platform we were generously patronizing abruptly changed its policy and rejected our industry altogether. We lost two years of pixel data and the only marketing channel we’d been building, effectively forcing us to start from scratch.

Where did we go wrong? We went way too big into social media marketing experimentation, assuming with scale (more spending), all the answers would be revealed (best ad, best audience, lowest CAC, etc.). Not so…

If you don’t fully understand your funnel, your LTV, your conversion rate, and your break-even point, paid ads will almost certainly lose you money. Use organic channels, partnerships, or email until you can afford to experiment with precision. If (or when) you do opt for paid ads, be ruthless and conservative. You don’t need to spend $100K to determine whether an ad or audience group is working.

7. Committing to Long-Term Tools or Subscriptions You Don’t Use

It starts with a $99/month software subscription you swear you’ll need. Add in three more of those, a CRM you don’t fully understand, and a marketing automation platform you haven’t set up yet, and suddenly, you’re bleeding $400/month for tools that don’t generate a cent. Does that sound familiar?

This one’s a little embarrassing for me, since I know I’m guilty of it to this day. If you’re a techie, an experimenter, or just an inquisitive tinkerer, always looking for the next best tool or platform, it’s only natural that you’re going to accumulate a not-insignificant slew of (potentially redundant) subscriptions. While I do aim to audit and clean out my company’s subscriptions regularly, there are always those last few “maybes” I can’t bring myself to cancel, even though they may add a few hundred bucks to the burn rate (with no active ROI to show for them).

If you don’t have that extra few hundred bucks of margin to bleed through without feeling it, here are a few steps you can take: Try everything on a trial or monthly basis. Set a 30-day reminder: Did it move the needle? If not, cancel it. Your burn rate isn’t just payroll — it’s death by a thousand SaaS cuts.

Profit Is a Discipline, Not a Line Item

Founders love to talk about scale. But scaling waste is still waste.

The harsh truth is that many founders waste $25K not because they’re reckless, but because they’re naive and optimistic. They want to look legit, move fast, and compete with players ten steps ahead. But the longer I’ve built businesses, the more I realize: Strategic discipline is the real competitive advantage, and the most impressive entrepreneurs are the ones who do the most with the least.

Be stingy with your cash. Protect your margins. Delay gratification. And above all, only spend money that makes you more money.

Because wasting $25K doesn’t feel like a loss in the moment. But it usually buys you a lesson you could’ve gotten for free, while retaining that next six months of runway you didn’t have to burn. Cash, time, and wisdom are three of the most valuable tools for any entrepreneur, and they’re yours to gain, waste, or preserve as you choose.