According to Oliver Sanchez of Stone Bridge Ventures, the recent cash burn of Kelso Technologies (TSE: KLS) is not something that investors should be concerned about. While it is not uncommon for most people to invest in riskier or unprofitable businesses, it can make for a good investment in the long term. In fact, a popular investment strategy is to find unprofitable businesses and invest in them for the long term.
So even though it is not as profitable as other assets in your portfolio, it could eventually turn a profit. A good example to look at is Amazon, which was notoriously unprofitable during its initial years. But those who played the long game were able to see a major profit.
Is Kelso Technologies Going to Run Out of Money?
Despite the company’s need for cash, they have managed to reduce their cash burning by 99% over the past year. This lack of burns shows a lot of promise to all of the investors who want to invest since it can even improve its revenue growth by upwards of 14%. Overall, its growth is showing a lot of promise, even at a cursory glance.
According to findings by Stone Bridge Ventures senior account manager Oliver Sanchez, recent market information shows that the company is slowly building itself up for the long run. It also helps that the company is being very careful with its cash burns and how much debt it takes on. While the company did have a total of US$ 2.6 million by March 2023, it also had no debts. In the months leading up to March 2023, the company had only burnt US$ 25k, which means that it still has plenty left in the tank in case it needs more cash.
Will Kelso Technologies Easily Raise More Money?
Kelso Technologies have a lot of cash left over from their shareholder’s equity, which means that they will not be running out of cash any time soon. However, would they struggle when trying to generate more cash for their business?
According to Oliver Sanchez at Stone Bridge Ventures, despite the incredible progress that Kelso continues to show investors, it is still not in a position where it could easily generate funds for growth. Companies often generate cash in two major ways. They could either sell new shares for cash and use that to fuel growth or take on debt. Of course, the company is not looking to take on debt, but it might not be in the best position to burn cash, either.
Considering that the company’s total market capitalization is US$ 21m, it has only burnt through US$ 25k, which is only 0.1% of its market cap. Therefore, it can still sell plenty of its shares to fund its growth without having to worry about losing control. It is also in a unique position to borrow money but could pay slightly higher interest rates.
To conclude, Stone Bridge Ventures senior account manager Oliver Sanchez believes that Kelso is in a unique position of growth, and traders do not have to worry about the company burning its cash.