What We Work On
We take on the challenge of rethinking the familiar.
Ventures we back have one or more of these critical elements:
A significant innovation in either (or both) technology or business model.
Unusual approaches to technology, ventures into new markets, or contrarian approaches to existing markets.
“Black swan” ideas (high-impact innovations beyond the norm). As Nassim Nicholas Taleb put it, black swans are characterized by rarity, extreme impact and retrospective predictability. High-impact investments can change the dynamics of large markets.
We also pay close attention to ventures that aren’t intimidated by large markets — either current ones, or those newly enabled (or disrupted) by innovation. We love products that can break monopolies or create whole new markets. Similarly, we are keen to find a billion dollar market (versus a million dollar market) with a credible path to growth.
Another desirable quality: a venture with short innovation cycles. We look for rapid cycles that lead to proof points and results, good or bad. (But we may also break our own rule: we have invested in a nuclear reactor with a long innovation cycle because other factors were compelling.)
Not all hard things are valuable, but most valuable things are hard. Every plan has risks, and we both understand and cherish that. We prefer technology risk to market risk, and we prefer to remove technology and business risks up front. Clearly identified and understood risks, along with a cogent plan for removing them for the least amount of money, are important criteria for evaluating ventures. It is more advantageous to all parties to fail in six months on $75,000 than in six years and $75M. We want to focus on the key risks early.
If you are considering KV:
Our fundamental business is technology-based economic disruption of large markets.
We prefer bold bets, though we make many types of bets. We bet on exceptional entrepreneurs, though we recognize this is a very qualitative and difficult assessment to make. We shun the smaller bet for the bigger bet, so we are a fit if you want to build a big, ambitious company. If you’re seeking a quick sale, there are other, better investment partners for you.
We are not looking for good ROI; we are looking to build companies. In our view, ROI follows company building. We will help you redefine your plan to meet these criteria if the technology breakthroughs are significant. We are good matches for teams that want assistance in building a bigger company, and we have a large range of operating resources to offer.
If you have a compelling technology-based story, if you are exceptionally accomplished or credentialed, if you are passionate and burning with creative fire, we are willing to listen.
For more on what we work on, take the time to understand our past efforts, our inspirations and how we think about inventing the future.
What we don’t invest in:
Growth capital / project financing / real estate / small business
We understand that there are: successful small businesses looking to expand their operations but lack differentiated technology or business-model innovations; project owners, operators and developers who are looking to build a plant, manufacturing facility or energy farm. While these are all worthwhile ideas, they are primarily the purview of financial service providers. This is not our focus at KV.
Long, drawn-out innovation cycles
The corollary to our fondness for short-innovation cycles is a dislike for long and expensive ones. An innovation or idea that requires $100M and five years to show its first proof point is not a target investment for us.
Niche markets with low upside but good IRR
At KV, we’re looking for ventures that have the growth potential to be billion-dollar companies. There is a significant difference between a million-dollar market and a billion-dollar market. A good return on investment (ROI) is not enough of an incentive for us. We care about pursuing good ROI in large companies.
Public companies conducting equity raises
Our goal and commitment is to invest in companies that aim to become large, sustainable public businesses. Businesses that are already public generally do not fit this criterion.
Copycat business plans
If your business plan is built on copying what existing companies are already doing (without a significant innovation), you are unlikely to be a fit for us. A social networking proposal that promises to be “just like Facebook” is not a compelling idea.