At face value, thesis-driven firms present a narrow definition of what they’re looking for. This can help founders quickly determine whether they’re a fit or not.
If you have an agritech company, why spend your outreach efforts on a firm that states they only invest in startups fitting their “future of work” thesis? This can help save both sides from wasting time time.
However, there's a 'dirty secret' lurking beneath the surface.
Thesis-driven VCs are firms that center their investment strategies around specific, carefully developed thesis statements and areas of focus. These theses range from 'future of work' and 'connected data' to 'healthy living,' 'future of the human experience,' and much more.
They use these focus points in their marketing materials, in discussions with founders, and their overall branding. This approach helps firms dive into more comprehensive research, publish content to build their domain expertise, and organize targeted outreach to specific founders. On the surface, it's a win-win situation that streamlines the process for everyone.
While all the above are true, here’s the 'dirty secret': the main practical benefit of having a thesis- the one I see used over and over- is that it provides an easy excuse to pass on a deal.
When a VC passes, the simple reason is often because they just couldn’t get excited by you or the deal. But VCs want to maintain their reputation and avoid founders broadcasting their negative interactions or perceived slights. So it’s far easier to go down the more gentle route and say “Sorry, this doesn’t fit our thesis. But let’s keep in touch.” instead of “You just didn’t excite us enough. Bye! 👋”
Here's the twist: most firms will still invest in an attractive opportunity outside their thesis area. If there's a stellar founder or a tempting deal on the table, they'll likely stretch their thesis definition and make it fit to get the deal done.
If you’re a founder building out your list of target investors, consider this:
If you need help building out your target list, here’s a few of our most updated resources to help: