Companies that grow, however modestly, or that cause incremental change in their markets, may be considered successful, and are to be applauded. But these are not the companies we are looking for at Foundation Capital.
Here, our energies and efforts are directed largely by our sense of what goes into making a company great—not merely successful, but great. We believe there are several criteria that are required to meet this standard.
First and foremost, we look for individuals with a sense of vision and purpose; teams, that are unusually creative and exceptionally motivated. These are people who are not afraid to engage in a clash of ideas, but rather who are willing to play those ideas off one another in a way that demonstrates an undeterrable desire to win.
Next, the idea itself. One that is more than merely incremental; it is positively disruptive. The execution of this idea will change the way businesses, people, and even industries, act. Here, we look to the power of technology, which is a huge force multiplier for young companies. Silicon Valley was built on meritocratic values, where creative content is the stock in trade, where technology helps the best idea win, and where disruption is a positive, when end users benefit.
Third, it takes a large and growing market. Such an environment offers the underlying context for a winning startup. Though insufficient by themselves, large—or potentially large—markets are necessary for providing real, substantive growth opportunities.
Finally, we believe that all three of these investment criteria must come together in the right business model—a model that is the difference between a great idea and a great business. How a young company is able to extract real rents for its unique intellectual property is a critical piece of winning and creating a long-term sustainable business.