Large negative Investment Cash Flows are typically seen in the Startup phase of a business when initial capital is invested to create and grow the company before it can earn any profits.
Typically, large negative Investment Cash Flows are expected during the Startup phase of a business. At this early stage, firms are trying to bring an idea or prototype to market, with few or no customers and no profits. Early-stage investors understand that startups are high-risk but may offer high rewards. Hence, they invest financial capital with the expectation of substantial returns, despite the initial lack of profits. During this phase, significant investments are made in assets and research and development with the hope of future returns.
In conclusion, the Startup phase is characterized by large negative Investment Cash Flows due to the high initial capital required to establish and grow the business before it can generate revenue and profits.