Venture Capital and the Internet’s Impact – Stratechery by Ben Thompson:

“The new competition amongst startups is about scaling and marketing and sales, all of which are expensive and require expenditures months or years ahead of expected profits, which is exactly what venture capital makes possible.”

*This is part of why there are huge valuations on seemingly profitless startups. VC investments are like rocket fuel. Not all crafts (investements/startups …) will make escape velocity and have a successful trip.