Sequoia criteria for seed investing

April 13, 2018

In January 2018, the legendary Silicon Valley VC Firm Sequoia closed its first seed capital Fund ($180m).

 

Sequoia is entering in the seed stage investing competing with the Angels Investors community of the Valley for the best early stage deals.

 

On its website Sequoia states its investment criteria for early stage investment. The listed criteria seem common sense, but they are a strong reminder that investing in start-ups should not be rocket science.

 

 

Clarity of purpose Summarize the company’s business on the back of a business card.

 

Large markets Address existing markets poised for rapid growth or change. A market on the path to a $1B potential allows for error and time for real margins to develop.

 

Rich customers Target customers who will move fast and pay a premium for a unique offering.

 

Focus Customers will only buy a simple product with a singular value proposition.

 

Pain killers Pick the one thing that is of burning importance to the customer, then delight them with a compelling solution.

 

Think differently Constantly challenge conventional wisdom. Take the contrarian route. Create novel solutions. Outwit the competition.

 

Team DNA A company’s DNA is set in the first 90 days. Choose your first few hires wisely.

 

Agility Stealth and speed can beat slow incumbents.

 

Resilience Hone your ability to bounce back and keep trying.

 

Frugality Focus spending on what’s critical. Spend only on the priorities and maximize profitability.

 

Inferno Start with only a little money. It forces discipline and focus. A huge market with customers yearning for a product developed by great engineers requires very little firepower.

 

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