Why is it not so rare that someone who receives a large sum of money, perhaps from a win, finds themselves in a worse situation shortly after?

To answer this question, we need to analyze the difference between “the rich” and “the suddenly rich.”

I was discussing this topic just a few days ago with a friend, and the answer, though obvious, is worth reflecting on: the inability to manage wealth, the focus on “wrong” things. How many times have we heard the phrase, “If I win, I’ll buy a Ferrari”? Or how many times have we said it ourselves?

Well, you bought the Ferrari. You’ve reduced the capital and increased your expenses. And now? Champagne? A helicopter ride? A two-million-euro villa for vacation?

The point is, the rich have become rich by creating stability over time (perhaps passed down through generations), and usually, they know how to manage their wealth. Those who have suddenly become rich, on the other hand, face the strong temptation to squander, to spend money without a defined strategy, treating wealth as something TEMPORARY.

If you think about it for a moment, this situation is often seen in the startup world, where a project is created “out of nothing” and receives funding or investments, sometimes even significant ones.

At this point, we face a crossroads: on one side are companies that manage their resources strategically and sustainably, on the other are those that consume them without a clear direction. The ability to manage both financial and organizational wealth is what determines the duration and success over time.

Those who lack this ability, once they’ve squandered the capital, find themselves back at square one (a bit like the famous game of the goose). And what’s the solution? We have a magic word that we unfortunately hear more and more often: Capital Increase, or AUCAP for friends, potentially the new drug of the millennium.

Let’s take a step back.

Startups often arise from brilliant ideas, but a great idea isn’t enough. The lack of a clear vision on business management can turn into a boomerang. It’s easy to be fascinated by rapid growth, but without a solid strategic plan (I’m not referring to business models expecting eight-figure revenues), the resources raised risk being burned quickly. This leads many startups to seek new capital to survive, creating a dependency that can be fatal.

There are no shortage of examples of startups that raised enormous capital only to discover, too late, that their organizational foundations weren’t up to the task. The consequence? Funds drained, disillusioned teams, and abandoned projects. And this happened not because the idea wasn’t valid, but because there was a lack of expert guidance in management.

I have been personally investing in startups for years, some successful, others clinging to continuous “capital increases.”

Let’s be clear: a capital increase does not equate to managerial incompetence. When used for its intended purpose (financing a project, expanding a company, acquisitions, etc.), capital increase is a crucial tool in healthy businesses.

However, the RECURRING use of this tool to finance a company that SYSTEMATICALLY loses money in investments not linked to a reasoned strategy is a vicious circle that leads to only one final result: the failure of the company and the loss of investor money.

Only in recent years have I witnessed companies throwing other people’s money into the fire on senseless operational costs (luxury offices and company cars, just to give one example, but I could continue by mentioning the opening of pointless offices in the USA), or, following managerial errors, turning to shareholders asking for money in various forms (guess what… capital increases? Exactly! But also minibonds, convertibles, or whatever other instrument, as long as money flows into the company’s bank account).

Ah, and let’s not talk about pre-money valuations or secondary market sales; this would open up a discussion that would require several LinkedIn articles (or appropriate legal discussions).

From these situations, and speaking as an investor, it’s better to stay away and avoid falling into the potentially lethal loop. As a management consultant — and this is why Rastan Consulting is on the market today — my goal is to assist these businesses in creating a pathway that transforms ideas into tangible results in a HEALTHY way. How? By avoiding common mistakes and consolidating growth through a sustainable business model.

Referring to the previous example, I would love to see more “wealthy” companies and fewer “suddenly rich” ones.