What’s a “Venture-Profile Company?”
Eric Rosenfeld - November 2022
What’s a “Venture-Profile Company?”
Q: Assuming a founding team with exceptional leadership, management, and technical skills, who bring something unique to their market that others can’t easily replicate; assuming a defensible product or service and highly scalable business model; and assuming there’s a queue of natural potential acquirers, what makes a company more "venture-compatible" than others?
If we had to narrow down to just 3 structural attributes to look for, they would likely be:
Powerful network effects - Each additional customer makes the product more valuable to all customers. Examples: LinkedIn, TikTok, PoachedJobs.
High customer switching costs - Not only the cost of time or money, but also the cost of risks, inconveniences, and emotional discomfort. Examples: switching from iPhone to Android, Google Home to Amazon Echo, or Eclypsium to CheckPoint.
Strong economies of scale - As transaction volumes increase, unit costs decrease. Examples: Costco, RISE Brewing, Honey Mama’s.
While we want to meet with every founder in our region and do our best to be helpful, we’re seeking to invest in those few insanely great venture-profile companies with "must-have" solutions and massive upside potential. Thank you for joining us in keeping our eyes peeled!