What We Look For…

In Founders & Teams

• Teams in which the founders have known one another for a considerable amount of time.
  We look for teams in which the level of trust and respect between the co-founders is high. This reflects our belief that at the earliest stages of a startup’s life, team risk is the greatest risk we must worry about.

• Teams that will not have difficulty attracting other great people.
  We look for founders who inspire confidence and loyalty from others because they are good at what they do, the kind of people we could picture ourselves working for under different circumstances. We look for people that others outside the startup can come to look up to as thought leaders in their chosen area of expertise.

• Solving this problem has become the founders’ life’s mission and they will work to solve that problem with or without help from outside investors.
  We look for founders who have an unconventional opinion about the market opportunity they are pursuing, and can explain their position is with evidence that investors can analyze independently. We look for founders who are focused squarely on solving their customers' problems.

• Teams that can focus on building a simple product that their initial customers love, and who can focus on a niche within which to launch that product.
  We look for teams that are judicious and frugal in how they deploy the startup’s resources.

• Founders who value teamwork, and who can become great leaders if they desire to do so.
  We value transparency, honesty, and openness. We value self-awareness. We like people who are determined and tenacious, who do not give up just because the going gets uncomfortable and things seem bleak.

• Founders who have a hard time doing something simply because it is what someone else expects them to do.
  We believe that most breakthrough innovations arise from disobedience. We detest arrogance. We admire confidence. We look for founders who are not afraid to be different. We look for founders who have prior demonstrable experience of good decision-making when things are uncertain and information is incomplete. We do not expect perfection in the early-stages of an innovation being brought to market. We value thoughtfulness and open-mindedness.

• Founders who lead with integrity and purpose by leading with core values. 

In Markets

• Large markets that could ultimately be served by the startup’s product, even though the initial target might be a small portion of the whole. We look for customers capable of and willing to pay for the product, and who are looking for and eager to find a solution to their problem.

• Markets in which the pain is acute because the problem suppresses customers’ profits significantly, or because the problem makes users far less effective and efficient than they could be.

  If currently the addressable market is between $1B and $10B, we want to see evidence that it is growing quickly enough to support the startup’s future goals, and the competition that we assume will quickly follow if the team is successful.

In Business Models

• Network Effects
  It will benefit from network effects and word-of-mouth marketing as time progresses.

• Deeply Engaged Users
  Shows evidence of developing communities with deeply engaged and highly committed users in either a business-to-consumer or business-to-business context.

• Efficient Scale Potential
  Can scale efficiently and quickly once product-market-fit has been established - we recognize that this is relative, and will differ for startups with business models that are not pure-play software only.

• Economic Moat
  Can eventually benefit from an economic moat as the startup matures into a company, and the business model becomes established. Note that in the early days of a startup’s growth we are interested in the potential for economic moats to develop, not so much that they already exist. In the early days it is more important to make customers happy and to get potential customers to give a shit about what the startups in which we might invest are building. We think we are uniquely positioned to help accomplish this.
  
  Our working definition of an economic moat: “An economic moat is a structural barrier that protects a company from competition; It is an inherent and inbuilt feature of a startup’s business model that dynamically enhances, strengthens, and reinforces its competitive position over time.”
  
  The first part of this definition is from Why Moats Matter: The Morningstar Approach To Stock Investing, by Heather Brilliant, Elizabeth Collins, et al. The second part is based on Brian Aoaeh’s prior work investigating economic moats in early-stage tech startups - from as far back as 2016, Economic Moats – For Early-Stage Tech Startups (6 Blog Posts & An "EPIC!" Presentation Deck)