Our operating principles are our framework for making decisions and taking action. They are built on years of experience and learning what success looks like for OCV’s portfolio companies. Our operating principles ensure efficiency and effectiveness for the firm and our companies.
We build for venture-scale
Many project maintainers or potential founders ask us early on about our expectations. For example, they ask if we will demand they become profitable early, or if we “flip” companies quickly, etc. Like other venture firms, we only have one goal: when we start a new company, we expect that the company eventually has the potential to become huge and achieve venture-scale returns. This usually means $1B+ valuations or IPO, and over $100M in revenue.
OCV companies strive to build big companies that achieve high revenue targets and growth rates—founders are signing up to swing for the fences and push the pace on how fast they can grow the company. Raising venture capital is a vital tool needed to accelerate and fund growth. Founders need to be prepared to fundraise.
We build open core
OCV starts open core companies around existing open source projects. Building an open core company requires having a vision for building paid features around the open source core without degrading the original project or features. The recommendation is to make software functionality used by individual contributors free and to charge around features and functionalities their managers mandate. This pricing framework is called buyer-based open core. Solely providing support services for the open source project is rarely a viable business strategy.
OCV companies are expected to build on top of the original open source project the company was started around. Ideally, the company is the owner and primary maintainer of the project. Traction around an open source software project (i.e. usage, # of active monthly pull requests (MPRs), growth) is key to evaluating a company’s potential. It indicates utilization interest and active users are a great resource for gaining feedback and marketing the company. When companies move away from open source, we have yet to see success.
We wind down when it’s the best option
Our model is not to give founders as many “shots on goal” as possible while they navigate the idea maze. We already know the project they are commercializing and the general market. We're going "all in" right away to prove there's a real commercial opportunity. If so, founders are off to the races. If not, founders can wind down without burning years of their life.
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