My website is https://www.cs.toronto.edu/~duvenaud/
David Duvenaud
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It is an option, but it only allows for relatively slow growth, and only for businesses that aren’t capital-intensive. So it’s a good option for something like consulting firms or law firms, where there aren’t really any up-front costs that need to be paid off over time.
But imagine you invent a new type of power plant. Many plants benefit from economies of scale, and also take 10-20 years to pay off their up-front construction costs. How could a co-op finance building even a single plant? Similar arguments apply to most forms of manufacturing, or really anything that can be mass-produced.
Even in the case where organic growth is sustainable, it’ll usually have to compete with much faster inorganic, financed growth.
The nice thing about loaners losing money on unprofitable businesses is that it’s a self-correcting problem to some degree—those loaners can only lose all their money once! And if consumers get part of that money, it’s effectively a charity.
Sometimes it seems like investors might not even consider whether their investments will make money, but most of the ones who last very long do care.