12 questions investors should ask about companies they're looking at that have yet to turn a profit

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Here are 12 questions investors should ask about the tech and growth companies they once loved that have yet to turn a profit. Read on.

I’m talking a lot about profits here because they’re needed to pay dividends and, ultimately, they drive stock prices. But investing isn’t about profits today as much as it is about what could be in the future. Mr. Market is always looking ahead.Article content

Is it meaningfully better than what already exists? Growth investors are looking for game changers, not incremental improvement. Are sales growing rapidly? The growth rate is important if the company is already producing revenue. It indicates how quickly customers are adopting the new idea. An innovation can be truly amazing, but the market may not be ready for it yet.

Who is backing the venture? The big, successful venture-capital firms make lots of mistakes , but their sponsorship of an emerging company is still an important factor in bringing on other investors. There must be something to the business if Sequoia Capital Operations LLC or Bill Gates is investing.

 

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