What VCs want (part 2)
23/09/2025 - VC - 2/3 minutes
Product
Even the strongest team has no chance if it can't actually produce a viable product. VCs, therefore, assess the product carefully.
10X Rule
Established companies tend to innovate slowly and incrementally, making them vulnerable to agile startups capable of 10× better innovations.
The more groundbreaking the product, the harder it is for incumbents to catch up—and the easier it is to overcome customer inertia and become a market leader.
While the 10× rule isn't a strict law, it helps distinguish incremental improvements from revolutionary solutions.
Example: large language models (LLMs) like ChatGPT offer answers that are sometimes 10× more accurate than Google on complex topics—or equally valuable answers delivered in a fraction of time. This is the product's disruptiveness—and today's tech success—explained.
The Idea Maze
Romantic stories of founders having one magical epiphany (e.g., GoPro's founder surfing in Bali) are appealing, but the reality is often messy. Success comes from constant market interaction, not just one stunning insight.
VCs look for founders with strong opinions, weakly held: people confident in their ideas—but ready to pivot based on feedback. They're interested in how you arrived at the idea, what market feedback you've integrated, and how you pivoted along the journey. In short: your "idea maze."
Market size
Venture investing is inherently asymmetric: most startups fail, but the few successes can return 10×, 30×, or even 40× the original investment. This asymmetry makes market size crucial.
Choose the Wrong Boat in the Right Sea
You might invest in a solid startup with a great team and product, but if the market is small, it may only become a medium-sized business—far from the next Facebook or Google.
The issue isn't necessarily the idea or the execution. It may simply be that the market is too small. Even the best startup won't grow beyond the limits of its market.
So instead, choose a startup operating in a large market with huge potential, because even if your team isn't perfect and you only capture a fraction of that market, the return on investment could still be astronomical.
In fast-growing markets, much of the value comes from the market's expansion itself—more so than from the team or product alone. Think of the dot-com bubble: many valuations were propelled by market momentum above all else.
Better to Have Remorse Than Regret
The asymmetry in returns means: if you make the wrong investment, you lose capital—but if you don't invest in a rocket ship, you lose out on much bigger gains.
This opportunity cost is even higher in large markets, driving VCs toward startups with outsized potential upside.
Conclusion: Venture capitalists invest in visionaries who combine founder-market fit, leadership, and resilience, paired with a disruptive product that can outcompete incumbents, all targeting a large, scalable market. Success lies where these three intersect—and without one, the investment may falter.
Read the part 1:
Good luck and be ambitious
Author: Marco Carabelli
Based on: “Secrets to Sand Hill Road” (Scott Kupor - book)