Team, Product, Market, Economics.

If you think about it, every investment thesis from every VC firm is a combination of team, product, market and economics (of the deal).

The supposed secret sauce, then, is how the firm prioritize and weight each element.

Don Valentine from Sequoia Capital believed that you should look at big markets.

Marc Andreesen, who coined the concept of product market fit believes that a great market will pull the product out of a team.

On the other hand Y-Combinator is famous for preferring founding teams as opposed to solo founders.

If i have to guess, i think Peter Thiel will have a bias towards a great product / technology than anything else. (See being a monopoly)

Obviously the economics of the deal must make sense (funding round, cheque size and valuation etc.)

Again, when push comes to shove, all the above will change when it’s a hot deal in a heated market capturing the zeigeist of the moment. (Airbnb for X anyone?)

I can’t say for sure in our specific time and space, what the winning combination will be. I’m definitely seeing the interplay between all four factors from the founding teams and founders i’ve met in the past 4+ months.

One things for sure – fundamentally the VC business is a business based on human relationships (then again, isn’t that what all business activities should be?). You can do all the due diligence, cash flow analysis, market sizing etc but ultimately the decision to invest or not is a leap of faith and a bet on the person. To paraphrase Jenny Lee from GGV:

Go with the head first, and then decide with the heart.