Comment by nickdothutton

This is more or less how I was taught to approach VC investment when I switched from being an operator to an investor.

Understand the environment (market conditions, constraints, fundamental enabling technology, economics, the macro) both now and in the future. The undeniable deep currents.

Look for companies solving a relatively specific, significant, painful problem, particularly one that is a barrier to future success/riches from the developing market it enables/supports. E.g. DWDM telecoms hardware supported the explosion of the Internet. Something you can do some diligence on to figure out the real questions around it.

Once you have a list of companies/founders, look to see if a sub-group is emerging from the gaggle. Focus on those 2-3.

Finally, ask yourself "what is the google on the moon" [1] whiteboard for this company. Meaning, how big can this be, where can this go, what (in those days) could be their 2nd, 3rd, 4th product.

[1] https://www.theregister.com/2006/03/08/you_only_search_twice...