When I was an investment banker, I worked on several financings for telecom and media businesses that had massive capital needs. What I found was that companies with capital-intensive business models calling for build-outs requiring hundreds of millions of dollars had additional elements of risk due to the size of the capital needs and nature of the projects. Projections are by their nature optimistic, and capital-intensive projects can cost more and be delayed (or fail) for a variety of factors, including execution issues, supply chain issues, cost overruns, and delays in obtaining governmental financing, approvals, permits, reviews, etc. These issues make future funding risk higher. All in all, I prefer to see venture capitalists focus on capital efficient business models.
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