Growth5 Blog

Wednesday, November 4, 2009

Kleiner Perkins: Five Investment Factors

Ever wonder how a VC firm decides to invest or not? Beth Seidenberg of Kleiner Perkins Caufield & Byers lays out the five factors her firm looks at when deciding whether a start-up deserves funding in the following "thought leader lecture" given at Stanford University.

You can watch the full video here. The 4:29 Five Investment Factors section is embedded below.

Here are the Five Factors:
1. A+ Leadership, Passionate Founders

2. Large, Fast-Growing, Under-Served Market

-leveraging network effects
-building authoritative, trusted brand
-obsess on customer experience

3. Reasonable Financing

A lot of startups see a high valuation as a badge of honor, but is usually ahead of what the product is worth. If we can't come to terms on valuation, it's probably not the right entrepreneurs.

4. Sense of Urgency

-does the market have a burning desire for the product? The leaders need to have the same sense of urgency.

5. Missionaries, not Mercenaries

-commitment to technical, marketing excellence

"it's not about I'm going to do this and make a lot of money, it's finding a great product with excellent market potential and driving that forward."

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