An investment thesis is to an investor like a value proposition is to an entrepreneur. You get asked what your thesis is all the time. As you get started, you’ll need to test out your thesis and see if any entrepreneurs want your capital, if they want you on their cap table, and if you’re offering what they want in terms of other resources or level of involvement. Essentially, you’ll need to find investment thesis-opportunity market fit. As your portfolio grows, you’ll find that your portfolio is your thesis.Compounding: Malcolm Gladwell wrote about 10,000 hours to become very accomplished in a particular thing. Bonnie wrote in Integrated Investing, start with what you know. It provides a starting point, you’re building on your expertise, you can add value as an expert in your field to the ventures you invest in, and it’ll give you credibility.
Entrepreneurial approach: What have you always wanted to be built? What would you build? But instead of building it yourself, you’d be backing another leader, maybe an emerging leader, to build it.
Solve a problem you and others have: This starts to look like a value proposition except you’re backing other people to do it instead of doing it yourself.
Your Thesis Evolves
As you invest more, put your thesis to the test, and gain more investment experience, your thesis will evolve. You’ll learn what ventures match your thesis and whether you want to invest with that focus. Pique Venture’s first portfolio had a broad thesis of investing social technology (people-focused, technology-enabled) and leadership diversity. She also wanted to invest in the creative economy, but didn’t find any viable ventures that met Pique’s criteria. After forming Pique’s portfolio, Bonnie started to see some patterns. The thesis evolved into: Pique Ventures invests in a diverse community of leaders building technologies with long-term utility and companies that care, connect, and protect.Pique’s thesis may evolve further still. Bonnie has always been focused on improving access to essential resources (Chapter 1 of Integrated Investing) as Pique’s primary impact concept. She is starting to realize that all of Pique’s companies are essentially optimizing resource allocation. One could view them as logistics tech. She did a mathematics degree and one of the courses she was most fascinated with and excelled in was Network Flow Theory, part of the field of Combinatorics & Optimization. It was focused on optimizing resource allocation. Investing is about optimizing how capital is allocated. Pique may get better and better at ways of supporting this optimization and our investment thesis may evolve to focus on logistics tech and optimizing resource allocation.
Exponential It’s a challenging time to be an investor. Traditional concepts of growth are being challenged. Conscious consumers are consuming less. They are reusing, repurposing, and recycling. Capital is concentrated in the hands of a few and as noted in the book Capital, written by French economist Thomas Piketty, wealth inequality is negatively impacting productivity and growth is slowing. So what does business growth look like in the context of impact investing? Perhaps we need to look at alternative definitions of success and of growth – like improvements in well-being or diversity, inclusion, and belonging. Perhaps it’s not economic growth by traditional measures but rather energy consumed and energy generated. It’s an incredibly interesting time to be an investor and is an opportunity for us to really disrupt and shape the future and challenge what success and growth look like.
Growth Improvements in Well-being
What Are You Reading and Other Due Diligence Questions?
Bonnie has been really into books lately and she’s not the only one. She noticed lots of people – including Susan Fowler and Hunter Walk – share lists of the books they read in the past year. It’s a way of communicating what you’re interested in and thinking about and can help you find points of alignment or expose you to new ideas.Taking a look at what you’ve been reading recently is another starting point for shaping your thesis. She has been reading a lot about courage and vulnerability – including The Courage to be Disliked and Brené Brown’s Daring Greatly – particularly because vulnerability is the root of creativity, innovation, and change.