Short answer is: look for adaptability, resilience, and long-term growth potential. The founding Team should have deep domain knowledge and understand the fluditity of the market direction, and show the ability to pivot effectively in response to market changes. Make sure that the startup is not confusing passing fads with a sutainable emerging trend. Their market entry should give them some runway before the market is likely to shift. Finally, the flexibility in Business Model to adapt quickly to changing circumstances by way of multiple revenue streams to mitigate risks, and the financial prudence to balance growth with burn.

Look at the total addressable market (TAM) and whether the sector is expanding or maturing. Evaluate growth drivers like technological advances, regulatory changes, or shifts in consumer behavior. Assess whether the startup is entering the market at the right moment—neither too early (educating the market) nor too late (crowded competition). Is the startup solving a real, significant problem for its target customers?

To gauge a startup's potential in fast-evolving markets, consider two innovative approaches. First, analyze the "Traction Trajectory" by plotting customer acquisition, revenue growth, user engagement, market expansion, and competitive landscape. This reveals momentum, market fit, and scaling potential. Second, evaluate "Founder-Market Fit" (FMF) via a scorecard assessing domain expertise, market understanding, adaptability, network, and vision alignment. Combine both for a comprehensive view. Key metrics include CLV, CAC, retention rates, and growth hacking strategies. This has worked for me; hope it helps you too.

In industries and arenas that are rapidly changing, it's often quite difficult to gauge if a company has serious potential. The best thing you can do is to get a benchmark from other similar startups. Almost every idea isn't THAT unique. If you find a company that's disrupting an industry, try to ask other VCs or founders if there are any competitors and find out what their perspective is. If the startup you're talking with makes the most sense or has the clearest path forward, they likely won't shy away from competition.

In fast-evolving markets, the true potential of a startup lies in its ability to anticipate shifts before they happen—whether through data-driven insights, creating products that not only meet but redefine market demand, or having a team with deep domain expertise and a track record of thriving under uncertainty. Scalability isn’t just about growth; it’s about whether their infrastructure and strategy can handle unpredictable surges while maintaining operational efficiency. These factors separate fleeting ideas from lasting ventures.