How is this a bad thing? Compare this requirement to, say, Uber, who has been losing billions, and has used investor money to engage in price dumping to corner the market.
However there is a case when you need money to actually do things, e.g.: pay employees, run clinical trials, rent or build up production capacity. If you don't have initial funds then you will be bogged down by doing contract work to hopefully fund your idea one day. It will slow you down and also quite possibly tangle you in support contracts in products you don't actually want to maintain.
My feeling is that the absolute vast majority of tech startups in the US are of the second kind.
> However there is a case when you need money to actually do things, e.g.: pay employees, run clinical trials, rent or build up production capacity. If you don't have initial funds
This has always been the case. Until unlimited US money perverted the incentives to become "waste billions to corner the market by barely legal means" or "wasted billions until someone buys you".
Let's take a look at YC companies, which is representative to the kind of startups we're talking about here. Do you think the majority of them get the funding to burn and subsidize the 10%?
Doordash losses: 204 million in 2018, 667 million in 2019, 461 million in 2020. 1.2 billion dollars in losses over three years. [1]
Cruise: Hard to find any data (the name doesn't help). Raised billions while producing zilch. Was acquired by GM, and is now generating only losses to the tune of 200-300 million dollars per quarter. That is, losses of around 1 billion dollars per year [2]
Instacart: Doesn't publish profitability (suprised Fry face). Had it's first profitable year in 7 years in 2020. In 2019 lost 300 million dollars. Previous data unavailable.
Should I go on?
Even the proftable darlings are usually profitable if you look at them right.
AirBnB: up and down, up and down. Sometimes down with losses up to 674 million dollars a year: [4]
Dropbox: became profitable only last year. Prior to that? Well, losses up to 484 million dollars of losses per year [5]
And so on.
The vast majority is fuelled by litrerally endless investor money with only two modes of operation: corner the market (that is, outlive other competitors who don't have such an unlimited amount of money) or get sold.
[1] https://www.businessofapps.com/data/doordash-statistics/
[2] https://www.statista.com/statistics/1077077/gm-cruise-operat...
[3] https://www.businessofapps.com/data/instacart-statistics/