When Early Stage VC Isn’t

One of the biggest barriers to innovation is often the lack of early stage funds available. I recently had a bizarre conversation with a manager at an n early stage technology fund who told me that “we don’t invest in anything more than 12 months away from profitability.”

Now I know that early stage investment is risk and scary for a lot of people (despite the potential returns) but 12 months from profitability? That would have cut out Google, Hotmail, Amazon, Facebook, Twitter and just about any company giving the returns that VCs slaver over.

Any business that close to profitability would surely be able to factorise orders, get a loan, negotiate advance payments from customers in exchange for a discount or engage an investment bank to raise funds. The last thing you would do in that position would be to give up equity in exchange for funding.  I wonder what they do invest in?


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