Fabrice recently posted a summary of his investment strategy on his blog here
He defines 9 business selection criteria. These three resonate most with me:
4. A business where you have a real shot at being one of the top players – at least in the region you are targeting
There is great value in being the #1 player in a market, particularly one that naturally resists fragmentation. Top players enjoy brand and scale effects which often translate to better profit margins.
6. A business with a little or no risk of disintermediation and/or margin compression by suppliers and/or customers
Occupying a strong position in the value chain by being extremely valuable to both your suppliers and customers and developing a unique product with few substitutes will help companies achieve the above criterion.
7. A business that is in a rapidly growing market
Rapidly growing markets create plentiful opportunities and can be more forgiving for start ups. But disrupting large, mature (not so fast growing) markets is also a good place to be if you have a product or business model innovation that is truly disruptive.