What I Look for Before Backing a Billion-Dollar Company

Being a fund manager has honestly been a dream come true for me, because the job is about seeing what others miss and having the conviction to back it early. For years now, I can say that in venture capital, we are not chasing safe investments. We always want to chase outsized returns that companies like Google, Uber or Airbnb delivered. However, that only happens when a business builds a real moat and fundamentally disrupts its space.

Often, that means investing in ideas that feel a little uncomfortable at first. It’s hard to wrap your head around a shift as radical as Uber’s before it actually exists; it’s like trying to explain the concept of taxation to a fifth-grader — they may get the idea but not really understand it. And when you invest in a thesis, you aren’t just pitching a product; you’re proposing a fundamental change in how people behave and how entire industries operate.

As a fund manager, I spend most of my day diving into these deals and tracking market shifts. It’s easy to get starry-eyed when a motivated founder promises the next “big” revolution. To stay grounded, I’ve developed a specific framework to ensure every opportunity actually hits the mark.

The company is a disruptor, not just another competitor

Most startups are competing in an existing market. They may build a better version of something. Maybe it is faster, cheaper or easier to use. That can still produce a successful company, but it is not what investors are typically looking for. Investors look for disruptors.

A disruptor changes how an industry works. It forces competitors to rethink their entire model.

One of the prominent investments I made in the VIDA Vision Fund was in SpaceX. For decades, rockets were treated as disposable. Launch them once, and they are gone forever. SpaceX is one of the very few rocket companies that has developed reusable rockets. That ability is incredibly important for building data centers in space; we’re no longer talking about putting Neil Armstrong on the moon for the first time.

When I evaluate a company, I ask myself a simple question: Is this business competing inside the system, or is it changing the system? Investors are usually interested in the second category.

The company is doing something that has never been done before

Innovation gets talked about constantly in the startup world, but true innovation is rare.

Many companies describe themselves as unique, but when you dig deeper, you discover several competitors doing something very similar. It’s easy to think about “can” being done, founders often forget how difficult it is to migrate customers from other platforms or build the kind of momentum it would take to turn profitable numbers.

What many investors and I look for are companies building capabilities that simply did not exist before. That might involve automation, advanced technology or a completely new approach to solving a problem.

Right now, there’s this huge pivot toward autonomy. It’s all about hardware doing the heavy lifting on complex tasks without needing humans to jump in. When technology gets that dependable, it creates a domino effect that changes the rules for every business it touches.

Then, the challenge is to determine whether there has been a precedent. If so, the company is likely optimizing an existing market. If not, they are likely pioneering a new one, which is also great news. This nuanced conversation is essential for investors to grasp, because the largest market caps are almost always built on entirely new categories.

The innovation dramatically improves scalability and cost efficiency

Even the most exciting technology does not matter if the economics do not work. Investors pay close attention to whether a company’s innovation changes the cost structure of an industry.

The best businesses do not just grow revenue. They make something dramatically more efficient. Again, reusable rockets provide a good example.

Imagine if every commercial airplane were destroyed after a single flight. Air travel would be prohibitively expensive. The reason air travel is accessible today is that planes can be used thousands of times. The same logic applies to space travel. Instead of discarding hardware after a single use, flight-proven rockets return to service again and again. This collapse in launch costs is the key driver for opening up entirely new markets in the space economy.

When I evaluate a company, I look for innovations that create that kind of shift, something that makes a process significantly cheaper, faster or more scalable. When that happens, adoption often accelerates quickly because the economics suddenly make sense for everyone in the business.

Why these signals matter to investors

Many venture investors build large portfolios and hope that one or two companies become huge winners. My philosophy is slightly different. I prefer concentration.

If you want to outperform your competitors in this sector, be ready for high-conviction selection over sheer volume. My focus is always on identifying companies that bypass incremental gains to drive fundamental structural disruption. Because when proprietary technology is paired with a radical shift in economics, we uncover a rare synergy that can translate into massive, scalable growth.

Therefore, do not focus only on building a good company. Focus on building a company that changes how an industry operates. Because investors are not blind when a business proves they can truly change the rules of the game.

Being a fund manager has honestly been a dream come true for me, because the job is about seeing what others miss and having the conviction to back it early. For years now, I can say that in venture capital, we are not chasing safe investments. We always want to chase outsized returns that companies like Google, Uber or Airbnb delivered. However, that only happens when a business builds a real moat and fundamentally disrupts its space.

Often, that means investing in ideas that feel a little uncomfortable at first. It’s hard to wrap your head around a shift as radical as Uber’s before it actually exists; it’s like trying to explain the concept of taxation to a fifth-grader — they may get the idea but not really understand it. And when you invest in a thesis, you aren’t just pitching a product; you’re proposing a fundamental change in how people behave and how entire industries operate.

As a fund manager, I spend most of my day diving into these deals and tracking market shifts. It’s easy to get starry-eyed when a motivated founder promises the next “big” revolution. To stay grounded, I’ve developed a specific framework to ensure every opportunity actually hits the mark.