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If so then why would VC's fund new competitors? The answer is they would not. VC's may throw their free money at new unquantifiable opportunities, but for this
by pishpash 6y ago
If so then why would VC's fund new competitors? The answer is they would not. VC's may throw their free money at new unquantifiable opportunities, but for this niche the financials will have become well known. In other words there would be less risk premium.
- jessaustin 6y agoVCs are looking for firms who can build "moats", i.e. commercial positions within markets that have built-in advantages against potential competitors. Sometimes this is some technological feat that is difficult to match, like Uber have been promising. Other times this is unethical business practices, like paying employees less than minimum wage. Such moats may not last very long, but the concept appeals to VCs. The phrase "war of capital attrition", however, will send capable VCs running for the exits. If they liked that sort of thing they would have been bankers.