What Is Patient Capital?
So, what exactly is patient capital? There is no definite phrase that could depict what patient capital has to offer but it is regarded as a long-term investment strategy where investors wait a significant period of time before they regain their capital. It has drawn a parallel with impact investment, which is a model that aims for positive change in some way, for instance, environmental, agricultural, social, etc. There is a core focus on long-term financial gain, of course, but the wider concept is more holistic than that because of these reasons. Startups, therefore, are able to see financial advancement combined with impacting positive change in this grand scheme of things.
What are the advantages and disadvantages of investing in patient capital?
There are clear advantages to discuss regarding patient capital. Firstly, it creates a valuable partnership that extends for many years into the future. Together, positive change is impacted, and a brighter future is paved out for the generations to come. Aside from this amazing reward, it opens up the door for facilitating the goal-drive investment outcomes on both sides which is great for both parties. The biggest disadvantage to note is that there is an obvious risk here that ranks much higher than other types of investment.
What is the difference between patient capital and traditional investment approaches?
The key difference between patient capital and all the other types of traditional investment approaches is that there is far less focus on financial gain, and a major concern around making things better for the future of the economy and everything that brings along with it. This means it is less of a short-term money grab and more of a consideration for authentic level movement that brings monetary prospects on a wider scale over a spread-out trajectory.
How can patient capital investments benefit both investors and the companies they invest in?
Both investor and investee become a mutually beneficial partnership once patient capital is entered into. Thanks to this, the relationship is a holistic one that creates ripples of indisputable change if it’s done right. The nucleus of the operation is entirely based on something that works for both sides of the equation, and this is the biggest benefit of all.
What is the minimum investment amount required?
Patient capital has some restrictions here and there, and each investor chooses their own strategy regarding what the bar is and where the minimum investment should be. For instance, one company may require three different third-party companies to be involved with a target capital accumulated that matches at least 50%, whereas another might have a set figure to get the ball rolling.
Whats is the impact on a company’s long-term growth and success?
Patient capital is a powerful way to address the gaping holes in funding for start-ups and smaller business models that are impeding what could otherwise be incredibly successful ventures. Combined with the shared goal of facilitating positive solutions in the long-term, there are lots of opportunities here for both growth and success. There is still a risk to be considered, and that should always be a part of the conversation.
Patient capital moves to pair investors with companies that need a helping hand. Together, they create a strategy where, financially, there will be returns, but alongside a lot of other social-focused movements too.
