For early-stage growth companies, an investment memo must prove a dual thesis: not only will the initial capital generate a fair return, but the company's progress will make it *more* attractive to buy additional shares at higher prices as it de-risks. If you wouldn't dollar-cost-average up, you shouldn't make the initial investment.

Some companies execute a 3-5 year plan and then revert to average returns. Others 'win by winning'—their success creates new opportunities and network effects, turning them into decade-long compounders that investors often sell too early.

While a $3-5 billion exit is an incredible achievement, the ambition in top-tier venture capital has scaled up. With tech giants valued in the trillions, VCs now underwrite investments with the potential for trillion-dollar outcomes, recalibrating what qualifies as a "sufficient" return.

Top growth investors deliberately allocate more of their diligence effort to understanding and underwriting massive upside scenarios (10x+ returns) rather than concentrating on mitigating potential downside. The power-law nature of venture returns makes this a rational focus for generating exceptional performance.

Contrary to the instinct to sell a big winner, top fund managers often hold onto their best-performing companies. The initial 10x return is a strong signal of a best-in-class product, team, and market, indicating potential for continued exponential growth rather than a peak.

The VC model thrives by creating liquidity events (M&A, IPO) for high-growth companies valued on forward revenue multiples, long before they can be assessed on free cash flow. This strategy is a rational bet on finding the next trillion-dollar winner, justifying the high failure rate of other portfolio companies.

A key investment criterion should be whether a company's story or sector, like AI or space, is compelling enough that a broad base of investors will eventually care. This narrative-driven screen helps identify stocks with high potential for future liquidity and multiple expansion, independent of current fundamentals.

The standard VC heuristic—that each investment must potentially return the entire fund—is strained by hyper-valuations. For a company raising at ~$200M, a typical fund needs a 60x return, meaning a $12 billion exit is the minimum for the investment to be a success, not a grand slam.

Massive opportunities are built on a three-legged framework, starting with an undeniable market gap. This gap must be an unequivocal data point, not a manufactured projection. Only after identifying this 'force of nature' can a great team be assembled, which then makes securing funding significantly easier.