Curating Your Investment Thesis

If you’re interested in getting a role in a VC firm, there are two things that matter in order to get a seat at the table: experience and knowledge. Having experience is much easier than said; working at a firm while getting an MBA, having done some work at an investment bank, or being an early employee at a successful startup are probably the best ways to get relevant experience. Which means if you aren’t able to achieve any of the above, your chances fall dramatically.

That leaves the other option: knowledge. You need to be able to do several things to show you have the smarts to survive in the big leagues. That means having the ability to 1) showcase your knowledge of a certain sector and 2) articulate how your investment strategy thinking aligns with the firm’s. Since that is what people in junior VC roles will be doing anyway, it helps to do this beforehand in order to catch the attention of firms. But how can you demonstrate your knowledge in a simple and concise manner?

This is where the investment thesis comes in. An investment thesis is a guiding set of ideas or beliefs that molds your investment strategy. It’s the North Star for investors and funds alike when sourcing companies and determining which ones to invest in. For someone who wants to work in VC, having an investment thesis on a particular number of sectors benefits you in multiple ways.

First, it shows that you’re serious about wanting to be in the VC realm. Having an investment thesis likely puts you at least above 50% of others looking to crack their way in. You’ve put in the work, done the research, and appear much more confident in identifying market trends and companies that fit your thesis. Second, it allows you to gain an appreciation for the work and minimum requirements that are needed to just get your foot in the door. If you don’t gag at the thought of doing copious amounts of research on a sector and hate yourself for working on it during your nights and weekends, then you may just be the kind of crazy that VCs look for.

So how do you build an investment thesis to present to VCs? There are multiple ways to go about it. One way involves identifying a sector you have experience in or are passionate about. The other involves getting creative. But both lead to the same end result.

First, you need to identify a sector regardless. Either think of what you’re currently working in, what you would want to work in, or just brainstorm generalities and narrow the scope. Once you’ve picked an industry you’re sure of, that’s where the real work begins. Start reading up everything on that sector. Find articles, white papers, tech publication resources. Seek out founders in that space and contact industry experts to get a better idea of what you’re looking into. Keep learning in order to identify trends and opportunities. This is what will take the longest amount of time since you need a large amount of information and data to draw on trends.

Once you’ve beaten your head over and over and can’t stop thinking about your sector, it’s time to curate the presentation. You need to take everything you’ve learned and absorbed and narrow it down into a slide deck that is no longer than 15-20 slides. You want to keep it simple but informative enough to draw conclusions and highlight the research you’ve done. Have a slide on your background, slides on industry research and trends, and slides on startups you’ve identified that match your thesis.

It always helps to practice your deck and even get in front of a few people you know. This will help identify any holes in your deck and sharpen it after every practice run. That way, by the time you get in front of a VC, you’ll be able to talk to them about your sector, the trends, potential investment opportunities, and how you can deliver value. Not only will you save the VC time (which is their most valuable asset), but they’ll be much more impressed with you than with the other person they just met who talked about AI in the most general sense.

Just remember that sectors shift over time, so it helps to stay on top of trends and adjust your investment thesis deck as necessary. Checking out different VC firms and their investment theses is a great way to improve your own. Monitoring your sector will help you stay on top of your game and on top of the radar when the time comes to present your investment thesis.