As the founders floods in the pitches, an investor has revealed how VCS uses a historical “law” to identify the best investments.

The General Partner of the European VC firm Creandum, Peter Specuts said, “Power Law in Venture Capital basically means that most of the small number of investment arises. Therefore, essentially, one or two big winners jointly added all other investments,” Peter Specch, European VC Firm Crendam described the general partner.

He described it as “important to decide for VCS”.

Power law Late 19^Wan-Centory Italian economist Wilfredo Peretto. He noticed that 20% of pea pods in his garden produced 80% of peas, and implemented this observation for economic conditions and inequality of money.

The speech explained that, VCS often knows finance ideas that are risky and innovative, know that some of these startups would fail. But returns from successful companies can become “large -scale winners”, which “all go out of loss or small exit,” he said.

“From the perspective of a return, you really want to hit the outlairs. We want Spotifice, Revolts, The Cleanus,” he said.

“The result of that size, or on that scale, returns more than five capital to investors and founders, out of the billion-dollar. The exit of $ 50 billion exits five $ 1 billion.”

Although the enterprise in Europe is improving the route to secure capital, yet some way has to be carried according to, according to State of European Tech Report of Atomico 2024,

In fact, the average seed round – the first official round of funding – was $ 1.4 million in Europe last year, compared to $ 3 million in the US, Atomico found. This is even more difficult at the development phase, with American startups, there is a possibility of raising funding rounds of more than $ 15 million twice.

Some 60% of the respondents told Atomico in 2024 that it was difficult to raise external finance compared to the previous year.

Specht said that an important way to convince VCs is that you are building the next Spotify or Revolut, showing that your company has “outsized result capacity”.

“You need to pitch why it can be so big, why it can become a category-defined company,” he said.

This involves explaining how you are dealing with the market and how the product can expand over time. In the seed phase, being an initial product or pilot user with positive reaction can help help.

If you do not yet have a product, there should be evidence that the product is filling a gap in the market and providing customers a real solution.

The VC also looks for “exceptionally strong and ambitious founders”, said that he wants to understand their inspiration and drive.

“One thing we clearly … likes to see whether the founders have spikes in a particular area, or a skill, and excellence in it,” he said.

It may be related to work, such as technical or leadership abilities, or even excellent in sports or studies.

Looking at the gap between funds in Europe and America, Harry StabingsThe founder of 20VC identified a difference in the method of pitch of founders.

The American founders are more bold and ambitious than their counterparts in Atlantic, stabbings said.

“I don’t think Europeans are good funding [as Americans]We need to tell better stories. We need to bring ourselves to the market. We are doing a lot of self-growing, “he said that CNBC made it.

Stubings stated that some founders have been advised to include “exit slides” in their pitches “badly”. “This makes me feel ill, as if I am planning my divorce when I get married.”

While the speech disagrees that European founders lack ambition, he thinks that startups in the region can tell better stories.

“We have people and founders who really have big dreams and want to build companies on a large scale,” he said. “In the general culture between Europe and America, I think American founder and American are very good at storytelling and also very good salespersons.”

“There, we can focus on being even more bold, at an even more sophisticated and visionary story,” Spat said.