Capital Intensive
In business, the term ‘capital intensive’ is used to describe an organization or enterprise that requires a large amount of money to finance its operations. The term is typically used in reference to businesses that require a lot of money to buy equipment or property, or to businesses that have high overhead costs.
A capital intensive business is one that requires a significant investment of capital in order to generate revenue. The most common examples of capital intensive businesses are manufacturing firms, which must invest in expensive machinery and equipment, and natural resource companies, which must invest in exploration and extraction activities.
Many startups are also capital intensive, as they often require substantial investments in research and development activities before they can generate any revenue. For these reasons, many venture capitalists are hesitant to invest in startups unless they have a solid business plan and a talented management team.
The term ‘capital intensity’ is often used interchangeably with ‘asset intensity.’ Both terms refer to businesses that require large investments of capital in order to generate revenue.
