« Kennet hat trick on Times Tech Track 100 | Main | The value of business model purity »


Frank Felix

I like the points that you make, and fully support your positive view of bootstrapping and cash-efficiency.

However, I wonder about the role of Venture Capital here. If a founder grew a company to significant revenues and profitability, and seeks an external investment, e.g., to enter foreign markets: where is the real risk for the VC investor? No more "venture" ... just an investment in a company's stock with high potential. This may not work, because first, there is no free lunch, second, it will attract competition from banks, wealthy private investors, and others.


You're quite right - this is where "venture capital" becomes a misnomer. We call investments at that stage "growth equity" and the investor's intention is clearly not to take venture risk, but only execution risk. Such an investment may be less risky than an earlier-stage venture investment, and in exchange the investor accepts lower returns (on average). This really represents a disaggregation of risks, with investors of different risk appetites choosing to invest at different stages. There is competition in growth equity already, just as there is in venture investing, and in public markets investing.

The comments to this entry are closed.

My Photo

Your email address:

Powered by FeedBlitz

Search this blog

  • Google


Twitter Updates

    follow me on Twitter