I’m a Fund Manager. Here Are 3 Things I Look for Before I Write a Check

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Venture capitals are not chasing safe investments. They always want to chase outsized returns that companies like Google, Uber or Airbnb delivered. However, that only happens when a business builds a real moat and fundamentally disrupts its space.  Often, that means investing in ideas that feel a little uncomfortable at first. It’s hard to wrap your head around a shift as radical as Uber’s before it actually exists; it’s like trying to explain the concept of taxation to a fifth-grader — they may get the idea but not really understand it. And when you invest in a thesis, you aren’t just pitching a product; you’re proposing a fundamental change in how people behave and how entire industries operate.

As a fund manager, he spends most of his day diving into these deals and tracking market shifts. It’s easy to get starry-eyed when a motivated founder promises the next “big” revolution. To stay grounded, he has developed a specific framework to ensure every opportunity actually hits the mark.

1. The company is a disruptor, not just another competitor.  Most startups are competing in an existing market. They may build a better version of something. Maybe it is faster, cheaper or easier to use. That can still produce a successful company, but it is not what investors are typically looking for. Investors look for disruptors.   A disruptor changes how an industry works. It forces competitors to rethink their entire model.  According to the author, when he evaluates a company, I ask myself a simple question: Is this business competing inside the system, or is it changing the system? Investors are usually interested in the second category.
2. The company is doing something that has never been done before.  Innovation gets talked about constantly in the startup world, but true innovation is rare.  Many companies describe themselves as unique, but when you dig deeper, you discover several competitors doing something very similar. It’s easy to think about “can” being done, founders often forget how difficult it is to migrate customers from other platforms or build the kind of momentum it would take to turn profitable numbers.  What many investors and I look for are companies building capabilities that simply did not exist before. That might involve automation, advanced technology or a completely new approach to solving a problem.  Then the challenge is to determine whether there has been a precedent. If so, the company is likely optimizing an existing market. If not, they are likely pioneering a new one, which is also great news. This nuanced conversation is essential for investors to grasp, because the largest market caps are almost always built on entirely new categories.
3. The innovation dramatically improves scalability and cost efficiency.  Even the most exciting technology does not matter if the economics do not work. Investors pay close attention to whether a company’s innovation changes the cost structure of an industry.  The best businesses do not just grow revenue. They make something dramatically more efficient.  According to the author, when he evaluates a company, he looks for innovations that create something that makes a process significantly cheaper, faster or more scalable. When that happens, adoption often accelerates quickly because the economics suddenly make sense for everyone in the business.

Why these signals matter to investors.  Many venture investors build large portfolios and hope that one or two companies become huge winners. The author’s philosophy is slightly different. He prefers concentration.  If you want to outperform your competitors in this sector, be ready for high-conviction selection over sheer volume. His focus is always on identifying companies that bypass incremental gains to drive fundamental structural disruption. Because when proprietary technology is paired with a radical shift in economics, we uncover a rare synergy that can translate into massive, scalable growth.

Therefore, do not focus only on building a good company. Focus on building a company that changes how an industry operates. Because investors are not blind when a business proves they can truly change the rules of the game.

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