Hi Naomi. I'll take your comment on face value:
Why invest in a loss-making business? Future prospects.
As rough examples, in a loss making mining business, you're hoping they'll find get a valuable resource, or start shipping enough raw or processed material to make cash.
In software and many other industries it's all about growth: build the product, keep investing in it, hope to reach critical mass.
You're generally betting a company will have enough cash to make it through the so-called valley of death to turn a profit.
Some don't. Many don't. But when they do, profits can be swift, profits turn into more profits, and market cap valuations and therefore shareprices rapidly rise.
IPOs, again generally speaking in businessed like this, offer an injection of new funds to help companies with growth efforts, or pay for new investments or tech, or pay off debts, and so on.
They don't always work. I don't know the breakdown but there's a mass of ********* that continually raise cash from sophisticated investors and others, hoping to make it another year and sell more or get more clients. Even well run Australian companies can eventually just run out of steam as investors are unwilling to throw good money after bad, even when the prospects look good. See: VIV.
I'd consider this a speculative play - you'd know a lot more if you tried some goat's milk for yourself. I haven't, but I do know goat's cheese is delicious as an alternative soft cheese.
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