In venture capital, internal discussions are the backbone of investment decisions. Rob Go, co-founder and Partner at NextView Ventures, provides insight into what his team looks for when evaluating startups. While the decision ultimately relies on team conviction rather than algorithms, Go highlights the importance of clear, data-driven discussions to mitigate bias and focus on what truly matters. Here are the three criteria Go emphasizes when discussing potential investments:
Jaw Dropping Value
A startup must deliver a value proposition that leaves customers in awe. This often means being 10x better than existing solutions. Whether it’s being faster, cheaper, or more convenient, the offering must compel consumers or businesses to take notice. For B2B companies, the challenge is breaking through the inertia of entrenched incumbents, while consumer businesses must overcome the abundance of choice. A “pretty good” value proposition is not enough—it must achieve “escape velocity.”
Competition Crushing Business Models
Creating value is just the start. Capturing that value requires a business model that scales exponentially. Go highlights the importance of network effects and economies of data scale. A business model should make it increasingly difficult for competitors to catch up as the company grows. Whether it’s a growing user base or data that enhances the service’s performance, the model must solidify the startup’s market position over time.
Distribution Advantage
A great product or service can still falter without an effective go-to-market strategy. Go emphasizes the value of startups with built-in distribution advantages. Whether it’s a viral free product leading to enterprise adoption or a team with unique industry relationships, strong distribution mitigates one of the greatest risks for early-stage companies: reaching customers. Examples like Code Climate and GrabCAD illustrate how strategic distribution can grease the wheels for rapid scaling.
Why These Criteria Matter
While each startup is unique, these three criteria—jaw dropping value, competition crushing business models, and distribution advantage—often define the path to success. Startups that excel in even one of these areas are more likely to secure the conviction of investors like NextView Ventures, even in the uncertain, early stages of development.
What other factors do you think are crucial for evaluating early-stage startups? Share your thoughts below!