A:

Venture capitalist investors view sustainable growth in a startup as necessary when considering investing in it. Typically, venture capitalists are attracted to a startup due to its potential for explosive growth. Venture capitalist Paul Graham says he looks for startups that are growing 5% a week in their early stages.

Of course, the startup team also has to demonstrate that this growth is sustainable. Often, startups come out of the gate strong, grow quickly but then find themselves losing momentum due to their inability to reach a critical mass. Other times, growth is so explosive that the startups become overwhelmed and unable to keep up with the pace of growth, disappointing customers. Therefore, venture capitalists put a high degree of effort into assessing the characters and qualities of the founders to determine whether they can handle such a situation.

Obviously, a track record of previous success is the most desired factor. However, personal characteristics the venture capitalist investors look for include persistence, integrity, cohesion and flexibility. Startups often evolve based on feedback they receive from the market and customers. Experienced venture capitalists understand that founders must be able to pivot their business models to survive and grow.

Venture capital is a business in which out of 10 investments, investors may lose all their money on eight, make back their money on one, but make 100 times their money on an investment. Sustainable growth is what separates the big winners from the misses. Sustainable growth implies that the growth is at a healthy rate which the company can maintain over a period of time.

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