Kleiner Perkins Partner Wen Hsieh Reveals What He Considers to Be Important in Making an Investment Decision
“What are the top three things you look for in an investment?” was the question that appeared on Quora and this is the answer given by Wen H. Hsieh, general partner at Kleiner Perkins:
In fact, I think about 5 key criteria, not just 3, when considering a venture investment opportunity.
Below I list them in order of importance (from most to least) for me:
This is a very important first screen because it is suddenly difficult to create new and large markets if it is small now or does not exist at all.
This is important to create barriers to entry, ideally in the long term.
This is a fundamental assessment I do to understand whether the team can come up with ideas and execute what they aspire to achieve.
This is also very important because a great startup market/technology/business model and a great team, but with terrible investment terms (e.g. unreasonably high valuation that severely limits my potential returns) may not be a good venture investment opportunity.
This last criterion is important because, as an early-stage investor, I will be in the trenches with the entrepreneurs for many years, so I better like them as well as the product/business they are pursuing.
An experienced venture capitalist once told me: “You can divorce your wife, but you can’t really divorce your portfolio company… so you better make sure you really like the startup and the founders before you invest!”
