Does having a pre-existing thesis (a 'prepared mind') give investors a genuine edge in reaching investment conviction faster than competitors?

Harry Stebbings · Mar 18, 2024

An unprepared mind is preferable to a prepared mind in early-stage investing, because prepared minds confine imagination and turn investors into consultants who lose their humanity

Being open to whatever the entrepreneur is courageous enough to build requires not having a pre-formed thesis

36:35 20VC: 19 Company Portfolio: 1 Decacorn, 7 Unicorns, 4 Acquisitions; One of the Best Seed Investors of All Time on How to Pick Generational Defining Founders, Why Nothing but the Founder Matters & Why the Best Investors are Never Happy w/ Gili Raanan

Gili Raanan · Mar 18, 2024

Prepared minds are valuable for multistage funds but seed investing requires entering a founder process completely unprepared, with no preconception of what the team should build

Seed is a different profession and mindset; a formed thesis poisons your view of what the team can go after

Scope: Specific to seed-stage investing

37:00 20VC: 19 Company Portfolio: 1 Decacorn, 7 Unicorns, 4 Acquisitions; One of the Best Seed Investors of All Time on How to Pick Generational Defining Founders, Why Nothing but the Founder Matters & Why the Best Investors are Never Happy w/ Gili Raanan

Rick Zullo · Aug 23, 2023

Being rigidly thesis-driven is a mistake that causes investors to miss great companies; investors should back founders they have a deep connection with even outside the thesis

He passed on Archer Aviation despite the founders building it in his own office, purely because it fell outside his thesis

48:22 20VC: NEW FORMAT: Mega Funds Will Come Back, Why Markups Have Corrupted VC, Why RIFs Should Always Be An Embarrassment To SaaS Founders and Why Pitching is BS and Fake with Jason Lemkin and Rick Zullo

Danny Rimer · Jun 17, 2024

The main cost of a thesis-driven approach is becoming categorical and passing on phenomenal founders who don't fit the thesis

15:04 20VC: Index's Danny Rimer on Investing Lessons from Hits like Figma, Discord and Etsy to Missing Snapchat, Airbnb, Facebook & Spotify | Why Valuation is a Trap and Market Sizing, Signalling and Sector/Geo-Specific Funds are all Noise

Martín Escobari · Nov 11, 2022

Thematic investing works only at the macro level — pick the broad trend, then go meet the front-line operators — while granular micro-theses about the specific technology that will win are a mistake

Betting on a macro trend like bank disintermediation let them find E*Trade and XP, whereas prescribing the specific mousetrap in advance forecloses being surprised by the people actually building it

31:23 Macro level thematic bets work specific technology theses dont

Harry Stebbings · Mar 28, 2025

The idea that every investor must have a thesis is nonsense; investors are not professors and he has never had one

70:12 Having a thesis is unnecessary pretension not a real requirement

Harry Stebbings · May 24, 2023

In AI today the pace of evolution makes five-year predictions unanswerable, so investors should back great people who are directionally right rather than specific theses

The space is moving so fast that no one can say what will be more or less needed in five years

10:54 Ai pace of change makes specific theses unreliable so back people directionally right

Danny Rimer · Jun 17, 2024

Investment theses are valuable as a discipline mechanism for sifting opportunities, not for being correct

The thesis builds and supports conviction and gives clarity on what you're looking for so you can pounce when you see it; whether the thesis turns out right is secondary

12:22 Thesis value is in disciplined sifting and sourcing not in being correct

Jake Saper · Mar 10, 2025

Emergence's pre-existing thesis that WebEx was a tired product ripe for replacement, combined with Zoom's early product-led growth and Eric Yuan's proven codec, gave the firm conviction to pursue the deal despite it being the largest check at among the highest prices it had ever paid

It was the high-integrity thing to do, and the founder recognized it and chose to work with them because of it

4:54 Specific thesis plus founder track record justifies paying top price

Jake Saper · Mar 10, 2025

No venture firm makes all of its money from prepared minds, but a prepared mind can genuinely help you reach conviction sooner or faster than competitors

He has lived it — Emergence's interview case on a Zoom competitor meant they had already studied the space when Zoom appeared

10:36 Prepared mind speeds conviction though not the sole source of returns

Jake Saper · Mar 10, 2025

Prepared minds are best developed out of the portfolio investments a firm already makes, by asking what a single company reveals about a broader thesis

Chorus.ai started as a bet on a young founder with only a partial view of voice in the enterprise, and what they learned there informed a broader voice-AI thesis behind later investments

10:56 Prepared minds are best built from portfolio derived broader theses