Unprofitable Tech 'Exactly What We Buy': Orlando Bravo

The video discusses the impact of rising interest rates and inflation on software valuations, highlighting the difference between profitable and unprofitable tech companies. It explains private equity strategies, focusing on investing in unprofitable tech and turning them profitable. The concept of discounting future cash flows is explored, noting its effect on tech valuations. The video concludes with a discussion on the pricing power of software companies and their role in enhancing productivity amid inflation.

What has been the trend in valuations for public profitable software companies?

• They have increased significantly.

• They have remained stable.

• They have decreased due to higher interest rates.

• They have fluctuated without a clear trend.

What is the primary focus of private equity firms like Atoma Bravo when investing in tech companies?

• Transforming unprofitable companies into profitable ones.

• Avoiding high-risk investments.

• Investing in already profitable companies.

• Focusing solely on short-term gains.

How do private equity firms view unprofitable tech companies?

• As opportunities to innovate and grow.

• As stable investments with guaranteed returns.

• As high-risk investments to avoid.

• As companies with no potential for growth.

Why is discounting future cash flows a significant factor in tech valuations?

• It stabilizes the value of future cash flows.

• It lowers the value of future cash flows due to higher rates.

• It has no impact on tech valuations.

• It increases the value of future cash flows.

How does inflation affect the value of software products?

• It makes them obsolete.

• It decreases their value.

• It has no effect on their value.

• It increases their value as productivity tools.