50 Questions: How does a VC consider barriers to entry?

Barriers to entry, sometimes also called sources of unfair advantage or sustainable competitive advantage are hugely important to VCs. A business with good barriers to entry is able to compete more effectively against competitors because the barriers prevent the competition from offering equivalent product. Further such companies typically command a higher valuations on exit because acquirers know they will struggle to build an equivalent product themselves and/or public market investors are less worried about competitors. Finally, there is a good correlation between strong barriers to entry and good margins as businesses scale.

Nic Brisbourne

Full Story: http://www.theequitykicker.com/2011/05/18/50-questions-how-does-a-vc-consider-barriers-to-entry/