Investors urge Companies to achieve product/market fit to enable scaling. VC investors know they should do the same – ie. Build a system or competency that can easily be marketed that creates clear differentiation to attract the best (not most) deals. In the early days of building a VC’s visibility this can mean taking the risk of investing before there is either critical mass in terms of scale or very rapid growth. However as the investor develops their brand the incentive to take this early risk decreases.
Clearly the best indicator of future growth, which in technology terms is closely correlated with value, is current growth.
The thing is, entrepreneurial success is surely not always that predictable. Real disruptive potential combined with lasting differentiation can take time to create, at the expense of early revenue. And it doesn’t always come from sources that are predictable. Venture returns depend on outliers, and outliers can’t be relied on to follow patterns.