Capital is only a temporary competitive advantage in enterprise software
Alex Clayton · 20VC: Spark Capital's Alex Clayton on How The Best Growth Investors Source, Evaluate and Win Deals, Why Market Depth Is Crucial When Analysing Markets & Why Capital Is Only A Temporary Competitive Advantage · Mar 25, 2019 · at 18:03
Alex Clayton, partner at Spark Capital, analyzes whether raising massive venture rounds creates a long-term defensible moat.
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“It's certainly a competitive advantage, but I think it's only temporary. But it can still have big impacts on markets. So in the early days, for sure, but I think at some point, the rubber meets the road. These companies are going to have to go public. They're going to have to show improving unit economics and leverage in business models. Public market investors are only going to tolerate very high burn if you're growing incredibly quickly. So even while companies are staying private longer and keep raising money, It's not going to be a sustainable advantage in the day, because they're going to have to go public, and they're going to get, every part of the business is going to get scrutinized.”
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