We have been investing for many years and a question we get asked often is what do we look for?
Since we invest primarily in early stage companies what matters most to us is the quality of the entrepreneurs who are promoting the idea. We know it is difficult for new companies to succeed, so we look for people with special qualities: they must be driven, they must be able to pivot if need be, they must be able to handle a lot of uncertainty, they must have a huge appetite for work, they must constantly be learning, they must be able to motivate and manage teams. The entrepreneurial journey is a tough one and not everyone succeeds. Without an indomitable spirit it is difficult to get to the end.
We start with the business plan. This is not a plan set in stone but is the first look at the quality of the mind or minds that have put it together. Have they thought deeply about the market? Have they done enough research to support their idea? Have they thought about the resources needed to succeed? Do they have a few plans to mitigate risks? Have they got past experience to support the plan? Can they justify all the main assumptions? How feasible is the roll out plan?
Beyond dealing with the entrepreneurial team the deal must address a big enough market so that if it succeeds it is worth everyone’s time. There are many small good business ideas. But we are looking for ideas which solve pain points in relatively sizeable markets.
What big problem does it solve? Does it matter to the customer? How is it faster, stronger, better?
Only with a substantial point of difference can you create a defensible business.