“Thanks. But no thanks.”
In late 2021, I started Symbol, a first-check venture capital firm focused on investments in pre-consensus opportunities.
This focus on pre-consensus markets and founders is born of personal experience. First as a founder. Then, as an investor.
When I co-founded Fundbox a decade ago, no Israeli VC would invest in our seed round. Why? Well, the common thinking back then was that Israeli companies couldn’t succeed in direct-to-customer fintech. “You know what, guys? You’re better off selling your underwriting software to banks, rather than trying to compete with them.”
That was the collective wisdom back then. It was the consensus. And Fundbox was non-consensus.
Although, in retrospect, it was really pre-consensus: since Fundbox’s founding in 2013, dozens of Israeli fintechs were launched on the premise of taking financial technology and services directly to consumers, freelancers, and small businesses, rather than selling them to incumbents. Some of the fastest growing companies recently, like NextInsurance or Melio, are examples of this. Direct fintech is now the consensus for VCs.
Since I started investing five years ago, I found myself again drawn to opportunities that I believed would eventually become consensus, but weren’t quite there yet. When I put in the first check, they were still pre-consensus.
When NextSilicon raised their first round in 2017, the consensus was that semiconductor companies should go after the Hardware AI market, not the High Performance Computing market, which was NextSilicon’s bet. Turns out going after the HPC market was exactly the right strategy, avoiding a concentrated buyer universe and making NextSilicon one of the fastest-growing semi companies in the world. It is now the consensus. But 5 years ago, they were striking out on the VC front and I and a few others were the only early believers.
Another example is FundGuard. Five years ago, VC consensus was that it’s impossible to build a company that sells into slow-moving behemoths in conservative industries like asset management. It turns out that the founders’ innovative land-and-expand strategy was successful at turning “impossible” into “very very hard”. Today, FundGuard is one of the fastest-growing fintechs in Israel, a consensus investment in VC circles.
Consensus, non-consensus, and pre-consensus
To understand pre-consensus, we first need to talk about consensus and non-consensus:
Early-stage investors look at many factors when making an investment. But two of the most important are the founding team and the target market.
These factors become consensus if they check most of the boxes in VC checklists. For founders, these usually involve extensive background or pedigree. For markets, it’s well-understood industries where venture-scale companies have already been built. This makes sense: investing in proven (or at least well credentialed) founders working in known industries with proven business cases is how most VCs limit risk and build conviction.
The reality is that not all founders and markets check the boxes. In fact, most don’t.
To visualize this, let’s think about founders and markets in terms of consensus and non-consensus, then do the consultant thing and draw a quadrant chart:
Consensus markets are easy to spot, especially in Israel: cybersecurity, infrastructure IT, developer tools, devops, verticalized financial services. Basically anywhere Israelis have already created massive companies.
Non-consensus markets are less-traveled roads, often considered niche or obscure. They’re usually deemed by early stage investors to be too complex to underwrite for small checks. The fund administration software space – FundGuard’s market – is a prime example. Instead, VCs prefer waiting for the next round and learning the market through traction. Some market opportunities are non-consensus because of VC preconceptions such as “CAC in consumer fintech is high” or “logistics teams are hard to sell into”.
Consensus founders are also easy to spot: they usually come from the “right” backgrounds, whether it’s army units, breakout startups, or big established brands. Some are second-timers.
Non-consensus founders are not as well-credentialled, typically young or first-timers, and can be seen as a significant risk factor. This is true, pretty much by definition, as they haven’t been tested. However, in our experience the critical parameters are a founder’s learning curve, mental flexibility, and their ability to truly understand customer pain points. This is true even if, and sometimes especially if, they don’t come from the obvious paths (or army units), giving them more interesting and unorthodox ways of thinking, perspectives and networks.
The Consensus Quadrant
Most VCs seek to invest in consensus founders going after consensus markets. This is why most funds focus on – and most deals happen in – what we call the Consensus Quadrant.
The concentration of activity in the Consensus Quadrant isn’t just driven by VCs’ risk appetite. It also stems from most Israeli founders taking a bottom-up approach to ideation, which involves immersing themselves in conversations with operators, investors, and potential customers in the ecosystem. This approach of idea crowdsourcing by definition drives ideation processes to converge to market consensus.
It’s also why we see in Consensus markets the phenomenon of Conceptual Clustering: several Israeli founder teams that get started in the same time period chasing after almost identical market opportunities.
Symbol is a generalist first-check firm, meaning we’re entirely sector agnostic. Having said that, we spend most of our time investing outside the Consensus Quadrant.
Going deep: the anti-checklist approach
So how do you successfully invest outside the Consensus Quadrant and find pre-consensus in a sea of non-consensus? The answer is depth.
Depth is one of Symbol’s core operating values. It recognizes that in order for us to be great partners to founders (and our investors), we need to invest time and effort to investigate and form thoughtful opinions of both founders and markets. In many ways, this is an anti-checklist approach, emphasizing deep understanding of what’s in front of us, rather than focusing on the pre-existing criteria.
Because here’s the thing: checklists change. They change because the world changes. People gain experience. Markets mature. Once-outlier approaches become mainstream. Pre-consensus is about spotting these changes and betting on founders and markets that don’t check the usual boxes before they become obvious. Going deep enables going beyond consensus.
Founder and Managing Partner.