Lessons From My First Investment Thesis

Over the course of the past month, I’ve been building my very own investment thesis. This one centers around the area of Data Privacy and the exciting transformations it is and will be undergoing. I learned a lot of valuable lessons along the way, and I hope to take this as simply one of the many stepping stones I aim to encounter along my way into the Venture Capital scene. Here’s the link to the deck and the lessons I learned below.

Pick a Sector You’re Interested In or Have Experience In

When trying to figure out what sector to base my investment thesis on, I had a few interests in mind. This article here also explains that when narrowing your choices, it helps to pick one that you’ve worked in or have had an active interest in. This helps because it makes the entire project much easier to do. If you’re not interested in plant-based meat, why would you go through the whole research, deep-dive, and analysis portion of understanding that industry? Sticking to what you know or are interested in is the best way to put your ideas and concepts together. For me, I narrowed it down to FinTech, Cybsersecurity, and Data Privacy. I chose Data Privacy because 1) I have experience in this sector, 2) it was a unique sector that will help me stand out, and 3) I haven’t seen any investment theses that centered around this sector. Those reasons were enough to convince me to take the dive.

Start Early and Be Consistent

Had I known the amount of effort and work required for an investment thesis deck, I would have started earlier. The good thing about how I approached it was that I stuck to a system and aimed to chip away a little each day. I ended up finishing two days later than what my deadline was, but had I not stuck to a schedule and split this project into chunkable bits to work on daily, I would have easily been overwhelmed and had to spend a few all-nighters to get this over the finish line. Schedule and prioritize this if needed to keep yourself on track.

Find As Many Quality Sources As Possible, But Not More

When I had finished my deck, I had compiled 53 pages of notes on overall research on the Data Privacy sector and other things related to that sector. I had drawn on over 40 sources of information to help me out. Looking back at it, there were pieces of research that really helped shape my thesis, while there were others that were more fluff. Before I dived into each paper, article, and analytical report, I could have made this much easier by mapping out what kind of information I needed to construct my deck and then tailor the research around that. This would have saved a lot of time, although I don’t really regret learning everything I did.

Have a Process

Along the lines of being consistent, the process I created for myself is 100% the reason I was able to outline and construct my thesis the way I did. I first spent a few days compiling all the different sources of information I could get my hands on (more than was necessary). Following that, I sorted the different forms of articles into various groups based on similarity (privacy laws, market trends, analytics, etc). I then began to read and take notes on each whitepaper or report one group at a time. This took the longest amount of time, but by the time I had finished I felt like I gained a semester of knowledge in just a few weeks. Working on this every day helped make the process much easier to digest as well. When it came time to building the deck, I knew what sources of information I needed to pull from and how to structure my slides.

Don’t Rush, But Don’t Be Lazy

Had I waited until the 11th hour, I would undoubtedly have finished my thesis deck with a less-than-stellar compilation of slides. Even when I finished when I did, I made that I didn’t leave any stone unturned. A lot of attention went into how each slide was structured, from beginning to end. Each slide has a purpose, designed for understanding a certain aspect of the Data Privacy industry. Because I knew this was a sector that wasn’t beaten to death with other previous theses, I knew I had to take my time with it. Even though I finished past my deadline, I felt proud of what I ended up compiling at the end.

Enjoy the Ride

With this being my first investment thesis deck, I didn’t know what to expect. I was unsure of how much work went into it, whether I was overdoing it, or if I needed to step up my efforts. After everything was said and done, I couldn’t believe what I had put together. I was excited by the amount of knowledge I had gained on the sector I had spent so much time exploring. It was a lot of work, but it also felt rewarding to see the outcome. I definitely would have savored reading through each article whitepaper more, and trying to understand the big picture while diving into the smaller details.

All in all, creating my first investment thesis was certainly a lot of work, but it was truly rewarding work. I now feel like I could walk up to any VC, explain the Data Privacy sector without skipping a beat, and clearly identify market trends along with startups to keep an eye out for. If presented with the opportunity to create another investment thesis for a different sector, I would be able to follow the same process, albeit a little more efficiently done this time around.