24. March 2025
Buffalo Investors Prefer Familiar Paths While Polar Bears Dare To Innovate
In venture capital, there exists a stark contrast between two types of investors: the buffaloes and the polar bears. The former are often characterized by their herd-like behavior, following familiar patterns and investing in companies that have proven successful in the past. On the other hand, the polar bears embody a more solitary and courageous approach, willing to venture into uncharted territory and invest in companies that may seem unconventional or unproven.
Legendary companies don’t repeat patterns – they create new ones. The best opportunities are often hidden from outsiders, and innovation requires a willingness to be uncomfortably right when everyone else is comfortably wrong. This is precisely where the polar bear mentality comes into play.
The polar bear’s hunting strategy is a perfect analogy for identifying investment opportunities in venture capital. Like the bears, investors need to develop specialized knowledge to spot value in areas that others may overlook. In the construction industry, McKinsey projections show the sector will reach $22 trillion by 2040, but traditional VC tactics and heuristics continue to be applied with poor results.
The construction industry operates on a different set of rules and idiosyncrasies compared to other sectors. It’s project-based, revenue comes from managing complexity, and failure is fatal, not iterative. Yet, many successful B2B category creators in this space were initially dismissed by mainstream investors due to their unconventional nature. The strongest signal for spotting these opportunities lies in early customer behavior, such as target users making purchase decisions with speed or intuitively grasping a solution’s value without extensive education.
The polar bear investor focuses on these early adoption signals, keeping portfolio work with experienced team members and listening more than speaking. They’re not afraid to admit when they don’t know something and are willing to take the long view, even if it means being uncomfortably right for an extended period. This approach requires a deep understanding of the industry and its nuances, as well as the courage to challenge conventional wisdom.
The choice between following the comfortable path with the herd or venturing into uncharted territory is a daily decision in the venture capital world. It’s easy to get caught up in the excitement of short-term rewards and invest in companies that seem familiar or promising. However, this approach often leads to repetition based on flawed early signals.
The next legendary companies won’t come from cloning what worked before. They’ll emerge from the uncharted territories, built by founders who have developed specialized knowledge and a deep understanding of their industries. These companies will be driven by innovation, not imitation, and they’ll create new opportunities that didn’t exist before.
These companies are built on vertical singularities – opportunities that don’t fit into familiar categories or business models. They’re driven by a deep understanding of their industries and a willingness to challenge conventional wisdom. As I look out at the wilderness of innovation, I’m proud to say that I’ve made my choice. I love being a polar bear, and I’ll continue to invest in companies that embody this mentality – companies that are driven by innovation, not imitation, and that have the potential to shape the future of various sectors.
Foundamental, the global investor I co-founded several years ago, focuses on backing ambitious, early-stage founders across the Americas, Asia-Pacific, and Europe. We’ve been fortunate enough to be an early investor in several category-defining startups, driven by a deep understanding of their industries and a willingness to challenge conventional wisdom.
The construction industry’s projected growth to $22 trillion by 2040 highlights its immense potential. However, traditional VC tactics are often applied with poor results due to the industry’s unique characteristics. The polar bear investor requires a deep understanding of these nuances and the courage to challenge conventional wisdom.
To spot these opportunities, early customer behavior is crucial. Target users making purchase decisions quickly or intuitively grasping a solution’s value without extensive education are strong signals. By focusing on these adoption patterns, investors can identify companies that may seem unconventional or unproven but hold immense potential.
In conclusion, being a polar bear in venture capital requires a unique set of skills and qualities. It demands a willingness to be uncomfortable, challenge conventional wisdom, and invest in companies that may seem unconventional or unproven. However, for those who are willing to take this path, the rewards can be immense – the opportunity to create something truly new and innovative, shape an industry into what it will become, and leave a lasting impact on the world of venture capital.
As I continue to invest in companies that embody this mentality, I’m confident that my choice was the right one. The polar bear’s approach is one that I’ll always stand by – a willingness to challenge conventional wisdom, listen more than speak, and take the long view, even if it means being uncomfortably right for an extended period.
The future of venture capital lies in embracing this mentality, recognizing that the next legendary companies won’t come from cloning what worked before. Instead, they’ll emerge from the uncharted territories, built by founders who have developed specialized knowledge and a deep understanding of their industries. The polar bear’s approach is one that I’m proud to be a part of – an approach that will continue to shape the world of venture capital for years to come.