The criteria that institutional investors apply to growth-stage company evaluation have evolved considerably through multiple market cycles. The framework that produced strong returns in 2019 — emphasizing top-line growth velocity above all other signals — is not the same framework that produces strong returns in 2025. The market has changed, the LP environment has changed, and the operating realities faced by growth-stage companies have changed in ways that require a more nuanced and comprehensive evaluation framework.
At BeMoreeDriven Capital, we have spent significant time over the past two years revisiting and refining the criteria we apply to potential investments. What follows is our current thinking on the qualities that distinguish genuinely durable growth-stage companies from companies that generate impressive headline metrics but face structural challenges in creating long-term institutional value.
Revenue Quality Is Not the Same as Revenue Growth
The most fundamental distinction in our current framework is between revenue quality and revenue growth. In a period of abundant capital and accelerating enterprise technology adoption, the two were highly correlated: companies grew quickly because customers were genuinely enthusiastic about the value they were receiving. In the current environment, where customers are conducting thorough economic reviews of every major software commitment and CAC has risen materially in most markets, the correlation between growth and quality has weakened.
The metrics we use to evaluate revenue quality are specific and demanding:
- Net Revenue Retention (NRR) above 120%: This single metric is more predictive of long-term enterprise value creation than almost any other single financial statistic. A company with NRR above 120% is generating organic growth from its existing customer base that, compounded over five years, creates a fundamentally different financial profile than a company growing purely through new logo acquisition.
- Customer concentration management: We evaluate not just whether a company has high customer concentration (which is often acceptable at early growth stages) but whether that concentration is declining as the business scales and whether the largest customers are expanding organically.
- Gross margin trajectory: For software companies, gross margins above 70% are the threshold we use as a starting point. More important than the absolute level is the direction: companies with improving gross margins as they scale have a structural pricing and delivery efficiency that compounds into exceptional long-term profitability.
Team Quality Is Not About Pedigree
We evaluate founding teams with significant scepticism toward traditional pedigree signals. Attendance at elite universities, previous employment at prominent technology companies, and prior successful exits are all useful data points but are not, in our experience, reliable predictors of the specific qualities that determine success at the growth stage.
The qualities we weight most heavily are harder to observe and require more diligent reference work to assess accurately:
Epistemic Honesty About the Business
The founders who build the most enduring companies are, in our experience, the ones who are most honest with themselves, their teams, their boards, and their investors about the state of the business. This means presenting data that contradicts the narrative as prominently as data that supports it. It means being the first to identify when a strategy is not working rather than the last. It means making difficult decisions based on evidence rather than delaying them in the hope that circumstances will change.
Operational Execution Velocity
At the growth stage, the pace at which a company identifies problems and executes solutions is a critical competitive differentiator. We assess execution velocity through specific evidence: time from product decision to deployment, time from sales learning to process change, response to competitive threats. Companies that operate with high execution velocity compound their advantages in ways that are extremely difficult for slower-moving competitors to overcome.
"The companies we are most confident in backing are the ones where the founders understand their own business better than we ever will — and are genuinely curious about understanding it even better still."
— Sophie Harrington, Principal, BeMoreeDriven Capital
Resilience Under Pressure
The growth stage of company building involves inevitable adversity: product failures, competitive threats, missed quarters, talent challenges, and macroeconomic headwinds. The quality we are assessing is not the absence of these challenges but the pattern of how the team responds to them. We look for evidence of constructive adaptation — the ability to extract learning from adversity and apply it systematically to improve the business — rather than attribution of problems to external factors.
Market Quality Determines the Ceiling
The best team in the world cannot build a large, durable company in a market that is small, contracting, or structurally commoditizing. Market quality is the dimension of our evaluation framework where we apply the most rigorous independent analysis, because it is the dimension that is most susceptible to the optimistic framing that excellent founders naturally apply to their total addressable market estimates.
The factors we analyze in assessing market quality include:
- Market structure and competitive intensity: We prefer markets that are large and growing but not yet dominated by well-capitalized incumbents. The presence of a large, complacent incumbent is often a positive signal — it indicates a large market with structural protection from new entrant disruption, but susceptibility to displacement from a purpose-built competitor.
- Unit economics ceiling: We model the long-term unit economics of the market explicitly, including the structural constraints on pricing power, cost of sales, and gross margin in a mature competitive environment. Companies building in markets where the unit economics ceiling is high and the structural factors that determine unit economics are favorable have a compounding advantage that becomes more valuable over long time horizons.
- Regulatory and structural durability: Markets with high regulatory barriers to entry, significant intellectual property protection, or proprietary data advantages that are difficult to replicate provide structural protection against commoditization that compounds the value of category leadership.
Governance Quality Signals Long-Term Orientation
At BeMoreeDriven Capital, we have consistently found that the quality of governance practices at growth-stage companies is a highly predictive indicator of long-term outcomes. Companies that invest in governance infrastructure early — independent board members with relevant expertise, audit and compensation committee structures, management information systems that provide real-time visibility into business performance — demonstrate a long-term orientation that correlates strongly with eventual public market or strategic exit success.
We actively work with our portfolio companies to build governance infrastructure that is appropriate for their stage, not the minimal viable structure that gets through the next financing round. This includes board composition guidance, management reporting framework development, and introductions to independent board members from our network of senior technology executives and functional leaders.
The Integration of These Factors
No single factor in our evaluation framework is determinative. The most durable growth-stage investments we have made have been companies where revenue quality, team quality, market quality, and governance quality were all strong but where the public market or consensus investor view undervalued one or more of these dimensions at the time we made our investment.
The work of identifying these opportunities requires deep, proprietary analysis and a long investment horizon. It is not work that can be shortcut by optimizing for deal velocity or by relying on consensus views of attractive sectors. It requires the intellectual honesty to update our frameworks when the evidence contradicts our priors, and the conviction to act decisively when we find companies that genuinely meet our criteria.
