Investment Thesis | VC Lingo | SOSV - The Accelerator VC - YouTube

Thesis.

Investment thesis.

Often referred to as a raison d'être.

Why does an investor invest?

When people are looking for investment? Often they think, Oh,

we just need someone with money. Anyone. Money!

Where do you go to rob the banks? As Willy Sutton said... No,

where do you go to make money? I forget what Willie Sutton said.

Go to the banks, rob the banks! That's because they have money. Well,

VCs have money, but they also have an investment thesis, a raison d'être,

a reason for existing or reason for investing.

And if you go to a VC just because they have money,

you are going to get yourself turned down 9 times out of 10.

Because people invest in certain areas that they care about and have expertise a

t. There's a few sort of general purpose investors,

but generally even the general purpose investors are looking for a certain stage

of investment.

They look for a certain turnover or certain traction rates that validate their

sort of comfort zone, the thing that they know something about.

So if you think of SOSV, for example,

the venture capital firm that I run, we are investing in deep tech companies.

We invest across four big themes of investment - life sciences,

hardware, that is connected devices, robotics, internet of things,

all that area. We invest in the future of food through Food-X and,

and we also invest in Asia,

cross-border internet kind of opportunities because of the growth that we see in

those areas. And we have people that are dedicated experts,

PhDs in various topics that have started companies in all of these different

areas and been successful in running and backing companies in these areas.

And it's for that reason we feel qualified that we can invest in those areas.

And the same thing is true for most professional investors.

They will have an area like for example,

SAS - software as a service or e-commerce or marketplace software or global

warming related opportunities to reduce waste and increase efficiency.

We also invest along themes inside of our life sciences,

like some of the areas that I've just mentioned.

Sometimes people are geographically limited. As a matter of fact,

most VCs are geographically limited. They'll just be looking at, say,

the Boston area in life science companies as it relates to cancer or something.

Other times they'll be looking at,

in terms of their raison d'etre, what are they actually there to serve?

Who are they there to serve? Who are their LPs?

There's a lot of impact investors that just say, okay,

we're investing along UN sustainability goals.

If you're not hitting one of those goals,

or if you're not hitting a particular one, two, or three of these goals,

then they don't matter to us. Raison d'etre is about,

like any other investment thesis, is about you know,

why people want to invest and take the risk of their capital into an area.

And it's often to achieve certain societal benefits and certain societal

outputs.

We have investors that we work with that are specifically geared towards

engineering and deep tech and AI because they think these are transformational

to the human race or longevity as another sort of

driver for many investors.

They're looking to improve the human condition.

So when you're looking for a VC, even just casually,

look at what are the things that they really care about?

Do they care about the future of protein you know,

new forms of protein, alternative foods?

If they are then if you are a company that is doing a SAS software,

you're not going to find investment there and you are sort of wasting your time,

their time to even try to have a conversation.

A lot of times people say, Oh, I know somebody that works for that firm.

I can get you intro there.

That's useless unless they're also investing in that space.

That is what investment thesis is.

Look for a firm's investment thesis or their raison d'etre,

and from there you can have further discussions.

VC lingo.