6 ms·
> But then, venture capital backed companies generally (arguably by design) are not profitable I've heard this before but I don't get it. Why are they not prof
by endorphine 4y ago
> But then, venture capital backed companies generally (arguably by design) are not profitable
I've heard this before but I don't get it. Why are they not profitable "by design"?
Edit: not sure if it was the reason this is downvoted but this was an honest question
- jiveturkey 4y agoThey spend every cent (and then some) on growth. The model is to capture the market. You have to spend to do that. Once you do that, you can set the terms. Also, it happens to bring growth company valuations and a nice exit. What happens after that (ie if the entire thing was unsustainable), honey badger VC don't care. You also don't have a choice but to play the game. If you don't, your VC funded competition will outspend and destroy you.
- endorphine 4y agoThanks for this clear explanation.
- karolist 4y agoBecause growth is prioritized over profit in hopes of an exit. Built for exit startup economy.