Momentum

Where it comes from, why it's important, and the cost of manufacturing it

Momentum is one of the most powerful forces in markets. In late stage or public markets, momentum can drive prices (NVIDIA, anyone?). But in early-stage venture, momentum drives talent. Exceptional talent is the driver of impactful companies that deliver outlier early-stage venture returns, and talent density in a company pursuing a well-timed, potentially large market opportunity is the core of what we’re trying to build at the early stage.

So if momentum drives talent, how do we build (authentic) momentum? A little at a time.

It’s tempting to think momentum comes from a singular breakthrough, or a sole customer contract. But authentic momentum comes from small daily wins stacking until the outside world finally sees the energy that’s been building inside the organization for quite some time. Varda’s successful capsule re-entry is a perfect example of this. So is K2 Space’s $50M Series A announcement. Once that momentum gets going, it’s a very hard thing to stop. Momentum can compound a talent advantage, which accelerates execution, which capitalizes the business, which drives customer performance, which strengthens market position and converts all that potential energy (talent, capital, opportunity) into kinetic energy (high growth revenue, strong net income margins).

Where momentum can be a trap is when it’s manufactured. Loud (unearned) press, overpaying big name titles to join a company, and other similar tactics are all aimed at manufacturing momentum. The same authentic momentum that can quickly compound value can destroy value just as quickly when it’s manufactured.

Building momentum slowly is hard, but it’s how true defensibility is built and non-linear returns are achieved. We’re on the look out for people that can make that happen!