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When we’re building a new venture, it’s easy to believe that any money in the door is good money. After all, it takes money to make money. But what if I told you that there IS such thing as bad money?

This week, we’ll dive into good vs. bad money and how to approach your venture-building efforts sustainably.

Here’s what you’ll find:

The biggest mistake in corporate innovation isn’t bad ideas or slow execution.
It’s the type of money we use to fund new ventures.

Capital comes with expectations.

Those expectations shape strategy, hiring, pricing, customer selection, and market entry. Most innovation teams within large orgs don’t fail because they lack funding. They fail because the funding they get — and the expectations around that funding — forces the wrong behavior.

Expectations separate good money from bad money.

How the money expects a return will shape every early decision, from pricing strategy to customer selection.

There are only two funding profiles that matter when you're building something new:

Most corporate funding models follow the second pattern. There’s an expectation of fast growth in large markets, even before a venture has proven product-market fit. Ventures born in large orgs are able to tolerate losses for a long time because the parent company is profitable.

That sounds generous. But it’s actually toxic.

This approach leads teams to spend too much, hire too early, and chase big customers instead of early adopters. It encourages the use of traditional business cases and long-term forecasts in situations that require short-cycle testing and rapid iteration.

Consider the alternative. Allow a team to stay small, learn quickly, and prove their model before scaling. This doesn’t demand large markets on day one. But it does expect signal. It wants early evidence of pricing power, retention, and gross margin—even if revenue is small.

GOOD money is patient for growth and impatient for profit.
BAD money is impatient for growth and patient for profit.

What makes it good is that it creates pressure to prove the model early without demanding artificial scale. Profit acts as an early signal that the venture is solving a real problem in a way customers value enough to pay for. Growth may take time, especially in markets that are still forming, but profitability confirms the direction is sound.

Most corporate ventures never get GOOD money.

Inside large companies, capital isn’t scarce.
But it IS political.

New ventures are judged using the same metrics as mature businesses. That means stakeholders demand forecasts, estimates of addressable market size, and alignment with corporate goals.

So teams adjust their plans to fit those expectations. Market definitions get stretched and skewed to fit corporate-scale needs. Growth timelines are exaggerated to look more like perfect hockey sticks. Ideas are positioned as an extension of the core business.

And they get funded. On paper.

But the expectations tied to that money prevent teams from doing the actual work of discovery. Teams can’t stay lean. They can’t focus on signal. They skip hard conversations around pricing and costs. They run expensive tests and avoid direct customer interaction.

By the time the business hits its first real barrier, it’s bloated, misaligned, and too far from the original opportunity.

The problem wasn’t that the company failed to support the venture.
The problem was that it supported it in the wrong way.

If a company waits until the core business is in trouble to start funding new ventures, it creates pressure for quick wins. But disruptive ideas don’t deliver quick wins. (Say it with me now…)

Disruptive ideas don’t deliver quick wins!

The right time to invest in new growth is when the core is still healthy. That’s when leaders can afford to be patient for growth. But most wait until growth stalls, and then they demand scale from ideas that aren’t ready.

That mismatch kills ventures.

Good money only works if you’re willing to invest before you need the return.

Large companies can’t change overnight. But they can change how and where funding decisions are made.

One fix: break up the size of the decision-making unit.

If a $5 billion business needs a $250 million opportunity to move the needle, it will never fund a $10 million idea. Without smaller-scale decision-making, every new idea gets held to the same financial bar as a mature product, and most won’t make it past that test. But if you create smaller units (venture teams, internal studios, divisional experiments), those same ideas can matter.

Resourcing decisions should be made at a level where small wins still matter. That’s how early ventures survive.

This doesn’t mean early scale. It means early evidence.

A new venture should be expected to show signs of real customer behavior: willingness to pay, positive unit economics, a credible path to profitability. Profit matters not because it’s the end goal, but because it proves the business has a foundation.

When a venture can demonstrate profit at a small scale, it earns the right to grow.
When it can’t, it should pivot or shut down.

Too many corporate ventures burn through years of capital without ever answering the most basic questions. Not because the teams are bad. Because the money lets them avoid it.

If you want to fund differently, consider these principles as action points:

In the late 1990s, Intel and SAP launched a joint venture called Pandesic. The mission was clear: build a full-stack e-commerce platform that combined SAP’s software with Intel’s infrastructure. Both companies brought significant resources and credibility to the table. They also brought capital. Lots of it.

What they didn’t bring was alignment on expectations, or discipline on how the venture should grow.

Flush with internal funding, Pandesic was given the freedom to expand rapidly. And it did. The team grew fast, the scope ballooned, and the company attempted to serve a wide range of online retailers, from startups to large enterprises. But while the venture was aggressively chasing growth, it hadn’t locked down the basics: a stable business model, clear customer fit, or a path to profit.

This is what bad money looks like.

Pandesic was funded to scale before it had proven anything. It operated under the assumption that dominance would bring profitability later, a common fallacy in both corporate and VC-backed ventures. There was no urgency to prove margin, no forcing function to prioritize pricing or cost structure. The capital shielded the team from reality.

After three years of spending, misalignment, and underwhelming traction, Pandesic shut down in 2000. Intel and SAP had poured millions into a venture that never figured out how to win, even with their brands and balance sheets behind it. The postmortem was clear: Pandesic tried to act like a scaled company before it had earned the right.

It’s a sharp example of why being impatient for growth and patient for profit almost always backfires, especially inside corporate environments. Money alone doesn’t create success. The terms and timing of that money matter just as much.

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