The Characteristics Of A Great Company As Seen By Venture Capitalists

Influential Capital advises and invests in top ventures whose teams have proven to be capable of achieving atypical success. In the last 30 days, we’ve been approached on LinkedIn by more than 300 ventures seeking our advice and investment. That inspired us to compile and share the key factors that influence the investment decisions we make at Influential Capital.

Here are some of the characteristics we look for in companies:

  • Experienced leadership. Operating a business is challenging and teams with prior leadership experience have proven to be more successful than those without experience. We like to see a strong track record and positive indications of good leadership skills.
  • Sustainable advantages and differentiators. We look for companies who have created economic moats around their businesses. We seek unique differentiators that attract customers and are difficult for competitors to replicate.
  • Large market opportunity. Sizeable and expanding addressable markets support company growth, have higher revenue potential and offer greater ROI.
  • Honesty and integrity. Experience has shown us it’s critical to work with teams who are transparent and have higher motivators than money.
  • Simplicity. Can you explain your business in 2-3 simple sentences? Investors don’t have a lot of time and teams need to be able to stand out with only a few words.
  • Evidence of growth. Most companies who are struggling will not break out of that pattern. Clear evidence of historical growth and a solid base for future growth is important to us. Be prepared to share details around cash flow, projections and more.
  • Clear game plan. We back visionary leaders who create a simple and realistic execution strategy. These individuals operate in a steady manner and do not change their priorities constantly.
  • Product-market fit. We prefer companies who have successfully achieved product-market fit, are generating revenue profitably, and are looking to expand globally.
  • Market leader. We prioritize working with companies who are market leaders in their industry, or who have clear potential to become the dominant leader.
  • Great communication skills. Communication is a core leadership function. Founders, CEOs and leadership teams must be able to express themselves well. They need to think with clarity, express ideas and effectively share information with investors, employees, customers, partners, influencers and others.
  • Inside relationships. Ventures who have pre-existing relationships that create valuable, uncommon opportunities stand out. Imagine starting a fashion brand when your parent is the owner of Vogue magazine or Nordstrom. Connections like these, though unfair, can provide a serious competitive advantage.
  • Operating legally. We expect companies to take compliance seriously and understand the legal requirements in their operating jurisdictions.
  • Positive social impact. While not a hard rule, it weighs in a venture’s favor if they’re aligned with Influential Capital’s values around making a positive difference to the environment, sustainability, social cohesion and governance. We value ventures who make a true commitment to outcomes that can broadly improve the world in which we live.
  • Raising capital for the right reasons. Good entrepreneurs are opportunistic and righteous. In our due diligence, we rapidly assess whether a venture is raising capital to take advantage of a real market opportunity, or if the management team is raising money to dig themselves out of a hole.
  • Friend potential. We devote substantial time to our portfolio companies, and we like to spend that time with people we truly enjoy being around. We want to work with nice people.

If you’d like to meet with Influential Capital, please prepare to briefly speak to each of the points above prior to the discussion. If you’re not ready to do that, please delay the discussion until you are ready to ensure the pitch meeting is as informative, useful and quick as possible for both sides.

To learn more about our philosophies for investing and doing business visit my YouTube channel.

Jaron is the CEO of Influential Capital. Previously he founded Coinsetter, one of the first digital asset exchanges launched in 2012, and acquired Cavirtex, a leading exchange in Canada—both acquired by Kraken in 2016. Before entrepreneurial life, Jaron was in private equity and investment banking.