capital formation

Have less funding than your competitors? Good!

I’ve sometimes joked with companies in our portfolio that the best way to deal with a better funded competitor is to use their own relative lack of funding to their strategic advantage. But actually, this solution isn’t meant tongue-in-cheek – I’m being dead serious. While we have a few companies in the portfolio that have, for various reasons, raised significant amounts of capital, many of the businesses in which we have invested haven’t. Not only are they reasonably capital efficient measured alone, but when compared with their peers, a number have raised far less capital than companies with which they compete. I’m serious when I tell companies that the best way to combat an overfunded competitor is to take advantage…