Last week, I was fortunate enough to run into a well-known VC in Bangalore. After some idle chit-chat, we got around to discussing one of his portfolio companies, which was in the market to raise a follow-on round. The VC lamented that the company was comfortably profitable and in his opinion, shouldn’t try to raise a new round of funding at all. To say that I was somewhat bemused on hearing this would be a wild understatement.
To understand my consternation, it might be warranted to step back and take a look at the fundamentals of the venture capital hypothesis itself.