I’ve been getting this question a lot recently. I think everyone who asks the question isn’t really expecting that unique of an answer, but find it helpful to ask anyway in hopes of gleaning something specific to me or the firm.
All investors pretty much look at team, product, and market, in various ways. We are no different. But in a nutshell, here’s our take on what we look for that mirrors pretty closely to these three.
1. Golazo Potential. The #2 reason why VC’s pass aside from strength of team is “it’s too small“. It’s because of fund return economics, but also because of personal interest and ambition. Golazo is a spanish slang for a “beautiful goal” in soccer, and we are most excited about opportunities that have the potential to be uniquely spectacular. My partner Lee has shared more about this here.
2. Capital Efficient Beginnings. Although a company might have a spectacular goal, we focus on companies that have the potential for capital efficient beginnings. This is a fit for our own investment strategy as seed stage specialists, but also because we notice many of the best entrepreneurs take a capital efficient approach to starting and testing their businesses. Extraordinarily few internet based businesses started out by raising $10+M before ever launching a product. Our model works when a company is able to prove a lot with modest capital, and then leverage that early validation and market knowledge to really lean in and start growing their business. Some of these companies may raise quite a bit of capital to grow, but we look for opportunities where significant, value-creating milestones can be achieved with modest capital up front.
3. Excellent, authentic teams. We look for high-potential founding teams with some unique insight into the market they are going after due to authentic and deep prior experiences. This is in contrast to some companies that are hatched through a more academic approach of “what’s an opportunity that fits X, Y, or Z attributes”. Some great companies have been birthed through a more academic approach, but we tend to get excited about authentic founding stories, and feel like on the margins, authentic entrepreneurs have better intuition and determination in the early stages of building a business.