Cameron Lester and Mike Kwatinetz of Azure Capital Partners examine why start-up companies need to be time-efficient as well as capital-efficient.
In the world of start-ups, capital efficiency is a factor in determining how much entrepreneurs and investors realize on their invested time and capital. It is the ability of a business to reach positive cash flow at scale while consuming an acceptable amount of invested capital. It is important to limit shareholder dilution to entrepreneurs and early investors — the more capital raised, generally the less of the business the entrepreneur and the early venture capitalists will own.
Moreover, the greater the capital efficiency of a business, the better the probability that the company will be acquired or financed at attractive terms (or both), since acquiring companies and venture capitalists pay a premium for capital efficiency. Therefore, it is central to a company’s financial planning, board meetings and presentations to investors.
To read the full, original article click on this link: Another View: The Challenges of Time for Start-Ups - DealBook Blog - NYTimes.com
Author: Cameron Lester and Mike Kwatinetz
