How money flows

The most important essay about money founders and VCs must read

How Money Flows

There’s one question that every founder asks themselves — and that not enough investors can answer:

Why do some startups raise millions and others raise nothing?

You can have two companies with smart teams, real products, and even early traction — and yet one gets funded instantly while the other gets ignored. Why?

The answer is simple, but not obvious:

Money wants to solve the biggest, most painful, and most widely felt problems.

Once you understand that, everything about how markets work becomes clearer.

Capital is not infinite. It can’t solve every problem. So it prioritizes. And it flows — like water — toward the problems that matter most, to the most people.

Money is a limited resource. So it follows gravity. In business, that gravity is created by pain, urgency, and scale. Capital flows to the problems with the deepest valleys — the ones that affect millions of people and have billions in spend already happening. These are the problems that justify the cost, the risk, and the bet.

This is obvious in pharma. If you’re a biotech founder trying to cure a disease, are you going to target one that affects 10,000 people or 100 million? Obviously you can have a bigger impact on humanity curing 100 million patients, and that will also probably make the company more money than curing just 10,000.

The same is true for startups. A company saving Fortune 500s 15% on cloud infrastructure will raise faster than a company improving podcast notes for students — even if both are useful, even if both are well-built. One sits on top of a massive, painful, high-priority spend. The other is niche.

But here’s where it gets even more interesting.

Just like rivers gather more water as they move downhill, companies that solve big problems attract more capital — and that capital creates a compounding effect.

The more money a company raises, the faster it can grow. And the faster it grows, the more efficient it becomes.

With scale, customer acquisition costs decrease. Margins improve. Brand power compounds. Talent gets better. And all of that makes the company even more attractive to investors. So it raises again, faster, at better terms. The river becomes a flood.

This is the flywheel: capital attracts growth, growth attracts capital.

This is why money doesn’t just flow to the deepest valley — it accelerates toward it. The weight of previous capital pulls in more. It’s momentum. It’s gravity. And it’s why the rich get richer in startup land — not because the game is rigged, but because the system compounds around scale.

If you’re a founder, this is the question to ask before you build: Is this a top 3 priority for my customer? Is this something people are already spending money to solve? Is this a deep enough valley for the river to reach me?

If the answer is no, that’s fine — but understand what game you’re playing. You may be building a lifestyle business, or a niche product, or a creative project. That’s valid. But it’s not what venture capital is for.

And if you’re an investor, don’t be seduced by clever products solving tiny problems. Don’t fund streams on the edge of the mountain that will never reach the valley. Find the gravitational centers. Find the problems that demand to be solved, because they are massive, painful, and inevitable.

Because that’s where the river flows. That’s where the capital compounds. And that’s where the next great company gets built.

In the end, money — like water — always flows downhill.

It flows toward gravity. It pools where it can make more of itself. And it floods the valleys where the problems are biggest.

That’s how business works. That’s how the market works. That’s how money flows.

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