Venture capital firms see far more companies than they can fund. Understanding how they filter and evaluate opportunities helps founders prepare better and target the right investors.
The power-law logic
Because a few investments produce most of a fund’s returns, investors look for companies that could become very large, not just successful.
What gets evaluated
The team’s insight into the problem, the size and growth of the market, evidence of customer demand and the defensibility of the business all feature in the decision.
Fit matters as much as quality
Firms specialise by stage, sector and geography. A strong company can be rejected simply because it does not fit a fund’s strategy.
Key takeaways
- The power-law logic
- What gets evaluated
- Fit matters as much as quality
