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It's a term that was used by one of the VCs, to describe the dynamics of the supply-side of the marketplace. Perhaps he wasn't using it in the right context. Th

• brudgers 10y ago
  Most likely it was used in the general business sense as synonymous with positive cash flow. This suggests a different investment model than found in the Silicon Valley startup ecosystem: the more typical model wherein investors seek regular periodic returns via a share of short term net income. In the SV startup model, investors seek their returns via increasing the value of their equity rather than via "dividends". This means their expectation is that net revenue is used to grow the company not to pay investors...since extracting cash every year or quarter impedes growth. An investor seeking payments from operating cash flows may be a good investor, but the investment isn't really venture capital and the alignment of interests is not really conducive to a startup in the Silicon Valley sense. Not that that form of startup is better or worse, just different. Probably the best example of how a startup is meant to work is Amazon. For many years its value grew because it did not turn profits. Expenses generally totaled income plus any new investment. But at the end of the day its value was greater than its liabilities.
  • gerby 10y ago
    Indeed. It was actually an investor from LA that introduced the term to me. I was familiar with liquidity meaning the cash that's available to a company, but had never actually heard it used before to describe the dynamics of the supply-side of the marketplace.