What is patient capital?
A working definition from MIT Sloan
patient capital (noun)
A financial investment made with no expectation of turning a quick profit.
Venture capital firms typically push for-profit startups to achieve results quickly so investors can exit rapidly and make a profit. The practice may work fine for a food-delivery app or marketing software, but it works less well for startups in regulation-heavy industries like clean tech and biotech, which can spend years or even decades working on product development before achieving profitability.
Helping entrepreneurs access patient capital is one of the foundational premises of The Engine, a venture firm built by MIT to encourage the development of transformative physical technologies in industries such as climate technology, human health, and advanced systems and infrastructure.
Katie Rae, CEO and managing partner at The Engine, discussed patient capital — also referred to as long-term capital — in a November 2021 fireside chat with Dipender Saluja, managing partner at Capricorn Investment Group. “Developing good technology and iconic companies — companies that matter — has always been a patient exercise. It’s a grinding process to build these companies,” Saluja said. “Capital to build good companies always needs to be patient, and teams and investors and boards need to be patient, because you’re building something, hopefully, that is going to last.”
Going long with purpose: big bets, patient capital, and the future outlook of tough tech
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