Companies supported by policy: To invest or not to Invest?

"As Venture Capitalists, we won't take policy risk. If the company will only be successful based on the implementation of policy XYZ, we won't invest."

Quote by David Gold, a partner at Access Venture Partners.

Interesting Statement.

I'll always had to struggle between whether one should invest in companies that are heavily dependent on policy.

One thing for sure is that if we treat this statement as a black and white ultimatum, we'll be missing out on much less economically viable companies.

Here in Asia, local governments such as Philippines and Thailand are favorable governmental incentives to make projects which would be otherwise ignored attractive.

Yet, Projects are still well-structured, makes fundamental economical and environmental sense and can still offer stable cash flows.

A single "policy", the kyoto protocol, created an entire market based on carbon cap-and-trade altogether, attract billions of dollars. Yet, it is also heavily dependent on policy.

I believe we have to be comfortable with companies that are only economically viable with the help of certain policies, and as long as it makes economical/environmental sense, with an adequate risk/return, it should be a viable project.

One should not simply ignore policy but really understand why it was there in the first place and what the long term impacts will be like.