As an investor in startups, what do you look for when prospecting for new portfolio companies?'


At the end of the day, if the start-up is post revenue, you’re looking for startups that are having an easier time of it. Compared to all their other peers:

  • They are growing faster with the same amount of sales + marketing energy.
  • They are growing faster than the competition even without always knowing exactly why.
  • Customers are buying more and more products from them, even at a fairly early stage.
  • Customers use the product far more than almost any other product in their tech stack.
  • Etc.

The bottom line is this stuff is tough. It’s hard enough to build a startup that can get to $2m in revenues, let alone $10m. And it’s hard enough to then take one all the way to $100m.

And even $100m in ARR isn’t enough for most VCs. That isn’t even an IPO these days. VCs have to bet on SaaS startups they hope can get to $150m-$200m to IPO, and still grow 40%+ after that, year over year!

This is so hard.

So VCs really are looking for startups that for structural or other reasons, have it “easier” than 99% of the rest.

And that won’t feel all that fair to the 99% of us that aren’t having an “easier” time despite working just as hard, with just as strong of a team, as others. Not at all.

View original question on quora

Published on December 25, 2017

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