The Value of a Startup’s Vision Statement

Why a Vision Statement is the most important line of code a startup will ever write.

Traditional Vision Statements are Exciting for the Company

A traditional vision statement is aspirational for a company; it describes where the company is going if it’s successful. It can also be limiting when viewed through the lens of a venture capitalist.

Tesla’s is an example of a good traditional vision statement: “To create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.” Tesla is stating that if it’s successful in its mission, “to accelerate the world’s transition to sustainable energy,” then it will have created the most compelling car company of the 21st century.

A fundamental change in travel behavior may be the result of the continued growth of Tesla, but that vision is not what the company chooses to portray to Wall Street.

Tesla’s vision statement is certainly exciting to equity traders who may want exposure to publicly traded auto manufacturers, are choosing between peers in the sector, and wish to make a bet on the adoption of electric vehicles… but it’s not very exciting to an investor who may be looking for opportunities where growth means a behavioral change in the way humanity will travel.

A fundamental change in travel behavior may be the result of the continued growth of Tesla, but that vision is not what the company chooses to portray to Wall Street.

Startup Vision Statements are Exciting for the World

Venture Capitalists invest in disruption. An ideal startup vision statement should be aspirational not just for the business, but for the world; potential investors need to appreciate how the world will change if a venture is successful.

A vision statement helps investors appreciate a startup’s market opportunity in situations where it may be difficult for them to understand the value of a product nobody has ever seen before. It explains why a venture is different in a landscape that can appear competitive. It can also help an investor understand how ventures are similar to each other so that he can relate an opportunity to his investment thesis.

VC’s Seek to Align a Startup’s Vision with Their Thesis

An investor’s thesis is what differentiates her from her peers. It signals to founders and prospective limited partners why they should be associated with her portfolio over another (it’s like a VC’s vision statement).

An ideal startup vision statement should be aspirational for the world; potential investors need to appreciate how the world will change if a venture is successful.

Well-known examples in the space are Andreessen Horowitz’s super-concise thesis of “software is eating the world,” and Union Square Venture’s recently updated thesis to “back trusted brands that broaden access to knowledge, capital, and well-being by leveraging networks, platforms, and protocols.”

An alignment between a startup’s vision and a prospective investor’s thesis is important and not always obvious to see. LinkedIn and Uber might not seem like peers at first glance, but when their shared vision about economic opportunity is considered their similarities are striking.

How Vision Statements Explain Why Microsoft Would Acquire Uber

Vision alignment is one of the fundamental ingredients associated with all funding and acquisition events.

LinkedIn’s vision is “to create economic opportunity for every member of the global workforce,” and Uber’s is “transportation that’s safer, cheaper, and more reliable; transportation that creates more job opportunities and higher incomes for drivers.” Both companies envision improving economic opportunity for a large demographic of the global workforce. It’s not a stretch to imagine how the same investor might have backed both companies if his thesis was to bet on technology creating employment opportunities.

Ultimately, a variant of that thesis that may explain LinkedIn’s acquisition by Microsoft for $26.2B in 2016. Microsoft’s mission is “to empower every person and every organization on the planet to achieve more.” My hope is that nobody reading this will be surprised when Microsoft announces its acquisition of Uber, too.

A good vision statement can mean everything to a startup. It indicates where the founders want to take a company as it matures, and where the venture fits in with macro trends in the market. It’s a startup’s true north when it’s making strategic decisions, prioritizing initiatives, resolving conflicts, and motivating its teams. A vision statement is also what will ultimately compel a venture capitalist or an acquirer to pull the trigger on a deal.

Author

Harlan Milkove is a repeat VC-backed startup founder, and Managing Partner at Foundational where he works with early-stage startups to expedite their pursuit of venture capital. His prior venture Reonomy, a commercial real estate data analytics platform, has gone on to raise $125M+.