The "Dirty Secret" Behind Thesis-Driven VC Firms

Jason Yeh
October 17, 2023

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.

Understanding Thesis-driven VCs

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.

The Hidden Benefit… for VCs

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! 👋”

In reality…

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:

  1. When searching for potential investors, don’t be so particular about the filters you use. Check sizes and investment focuses evolve all the time and firms don’t always promptly update their websites or Crunchbase profiles to reflect that.
  2. Leverage the Fluid Nature of VCs - You never know when a VC who says they're only focused on doing one thing might get excited about some aspect of your opportunity and stretch that definition for you.
  3. Remember additional conversations help with the process - don’t completely waste your time with funds there’s no chance of being a fit for, but I would definitely stretch. Like we said with 1 and 2, you could be surprised AND an extra firm in the mix can help push the pressure of your fundraise.
  4. Don't Be Discouraged - Remember that getting rejected is no indictment on your ability as a founder and leader. There are thousands of other investors out there.

If you need help building out your target list, here’s a few of our most updated resources to help:

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