Startup investors are re-evaluating that approach. Following a year of dismal performances from companies that were heavily subsidized by venture capital, investors and board members are pressuring companies to figure out a more profitable business model, tech deal makers and startup founders say. Investors want startups to become less dependent on raised capital to cover the cost of customer discounts, such as e-commerce startup Brandless selling home and beauty products for a fraction of the cost of shipping, ride-hailing companies Uber UBER and Lyft discounting the cost of their rides, and meal-delivery service Postmates offering coupons for $100 off delivery fees.
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