This article discusses the importance of an investment thesis for venture capital (VC) firms. An investment thesis is a set of criteria that guides a VC firm’s investment decisions, outlining what types of companies they want to invest in and why.

The article argues that having a clear investment thesis is crucial for several reasons:

1. Deal flow: It helps attract deal flow from entrepreneurs and other investors who understand the VC firm’s focus.
2. Brand identity: A well-defined investment thesis creates a unique brand identity for the VC firm, setting it apart from generalist firms.
3. Data analysis: By tracking data related to their investment thesis, such as check count by stage or size level, VC firms can measure their performance and make informed decisions.

The article suggests that smaller VC firms should focus on becoming highly identified in a specific niche rather than trying to be generalists. This approach allows them to develop expertise and build relationships within their targeted market.

Some key points from the article include:

• Show your data: Share detailed analytics, such as check counts by stage or size level, to demonstrate performance and progress towards the investment thesis.
• Don’t bury your dead: Be transparent about failed investments and learn from them to improve future decisions.
• Focus on a niche: Identify a specific area of focus and develop expertise within that market.

Overall, the article emphasizes the importance of having a clear investment thesis for VC firms to attract deal flow, build their brand identity, and make data-driven investment decisions.