The 8 Structural Moats Founders Need to Build (And Why Investors Look For Them)
- Steve Torso
- 5 days ago
- 2 min read
Public markets are punishing software companies. Private markets are taking note.
The reality is becoming undeniable. Code is commoditising. Building a software product is no longer a defence strategy.
I was recently listening to Harry Stebbings interview with Gokul Rajaram. They navigated straight to the core of this shift. Rajaram articulated a framework that every founder and investor in the private capital ecosystem needs to internalise. He broke down the eight structural moats that separate durable companies from vulnerable ones.
Here are the eight moats Rajaram identified:
Data: Proprietary access to information that nobody else has. It must be unique and compounding.
Workflow: Deep embedment into the daily operations and money movement of a business.
Regulatory: Hard-won licenses and multi-year procurement contracts that create massive friction for competitors.
Distribution: Proprietary or exclusive channels to reach the end customer.
Ecosystem: A platform where third-party developers and partners build their own businesses on top of yours.
Network: Marketplace density, liquidity, and reputation history that cannot be replicated overnight.
Physical Infrastructure: Atoms over bits. Hardware and physical presence create heavy barriers to entry.
Scale: Pure cost advantages derived from massive size and production volume.
Rajaram notes that a company needs a score of 4 or more across these categories to be truly secure.
Sophisticated investors are already hunting for these specific signals. They are adjusting their thesis to screen for structural defence.
But here is the fracture in the market.
Founders are spending years building these moats. Yet they are forced to communicate their progress through fragmented emails, static pitch decks, and irregular updates. They are trying to prove their structural durability using communication methods that are entirely broken.
Investors are desperate for the signal Rajaram describes. Instead, they are drowning in noise. They are sifting through unusable deal flow on platforms that were never built for private capital.
The gap between a founder building a true moat and an investor looking to fund one is widening.
Building a durable business requires operational excellence. Connecting that business with the right capital requires something entirely different. Confidence comes from clarity.
We cannot expect private markets to run efficiently on guesswork and silence. The shift is happening. Signal is replacing noise. The future belongs to those who build structural moats and operate on the infrastructure required to prove them.
