The flaw is in the step 2. - raising capital reduces skin in the game which reduces “incentive”. Honestly heard this before in things like “don’t allow founders to cash out in early rounds they won’t be hungry”. This is akin to “if you take the shackles off your slaves they will run away”
Taking on capital reduces risk for the founder which makes it more likely they will take better long term decisions. There is a balance obviously - if you give me a billion dollars for my pitchdeck I will certainly feel reduced risk but that may be offset by the risk the owners of the billion now take on.
But yeah, the flaw is thinking hungry people make good long term decisions
being hungry means people are driven to make decisions, just not necessarily good ones. they're after the drive, and hopefully acumen, but drive is more important than acumen, they hope.
Taking on capital reduces risk for the founder which makes it more likely they will take better long term decisions. There is a balance obviously - if you give me a billion dollars for my pitchdeck I will certainly feel reduced risk but that may be offset by the risk the owners of the billion now take on.
But yeah, the flaw is thinking hungry people make good long term decisions