The VC Model Has Become Risk-Averse

In today’s VC landscape there is a disconnect between immediate profitability and societal needs — for example, fighting climate change or shoring up the food supply

The need for solutions to these issues is becoming increasingly urgent, yet private investors still flock to larger rounds for later-stage, profitable businesses, preferably future monopolies.

One subtle change I’ve observed as a tech CEO is a shift in the metrics that many VCs rely on. Investors no longer seem to focus solely on factors like total addressable market; instead, they spend more time examining potential EBITDA performance (earnings before interest, taxation, depreciation, and amortization) or on cash flow generation. While rational, this is the approach we expect from private equity firms not VC funds. VC is no longer about risk/reward, it’s about reliability.

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Posted byarketyp