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Writing a Credible Investment Thesis

Only a third of acquiring executives actually write down the reasons for doing a deal.

By David Harding and Sam Rovit

November 15, 2004

Every deal your company proposes to do—big or small, strategic or tactical—should start with a clear statement how that particular deal would create value for your company. We call this the investment thesis. The investment thesis is no more or less than a definitive statement, based on a clear understanding of how money is made in your business, that outlines how adding this particular business to your portfolio will make your company more valuable. Many of the best acquirers write out their investment theses in black and white. Joe Trustey, managing partner of private equity and venture capital firm Summit Partners, describes the tool in one short sentence: "It tells me why I would want to own this business."

Perhaps you're rolling your eyes and saying to yourself, "Well, of course our company uses an investment thesis!" But unless you're in the private equity business—which in our experience is more disciplined in crafting investment theses than are corporate buyers—the odds aren't with you. For example, our survey of 250 senior executives across all industries revealed that only 29% of acquiring executives started out with an investment thesis (defined in that survey as a "sound reason for buying a company") that stood the test of time. More than 40% had no investment thesis whatsoever (!). Of those who did, fully half discovered within three years of closing the deal that their thesis was wrong.

Studies conducted by other firms support the conclusion that most companies are terrifyingly unclear about why they spend their shareholders' capital on acquisitions. A 2002 Accenture study, for example, found that 83% of executives surveyed admitted they were unable to distinguish between the value levers of M&A deals. In Booz Allen Hamilton's 1999 review of thirty-four frequent acquirers, which focused chiefly on integration, unsuccessful acquirers admitted that they fished in uncharted waters. They ranked "learning about new (and potentially related) business areas" as a top reason for making an acquisition. (Surely companies should know whether a business area is related to their core before they decide to buy into it!) Successful acquirers, by contrast, were more likely to cite "leading or responding to industry restructuring" as a reason for making an acquisition, suggesting that these companies had at least thought through the strategic implications of their moves.

Not that tipping one's hat to strategy is a cure-all. In our work with companies that are thinking about doing a deal, we often hear that the acquisition is intended for "strategic" reasons. That's simply not good enough. A credible investment thesis should describe a concrete benefit, rather than a vaguely stated strategic value.

A credible investment thesis should describe a concrete benefit, rather than a vaguely stated strategic value. This point needs underscoring. Justifying a deal as being "strategic" ex post facto is, in most cases, an invitation to inferior returns. Given how frequently we have heard weak "strategic" justifications after a deal has closed, it's worth passing along a warning from Craig Tall, vice chair of corporate development and strategic planning at Washington Mutual. In recent years, Tall's bank has made acquisitions a key part of a stunningly successful growth record. "When I see an expensive deal," Tall told us, "and they say it was a 'strategic' deal, it's a code for me that somebody paid too much."

And although sometimes the best offense is a good defense, this axiom does not really stand in for a valid investment thesis. On more than a few occasions, we have been witness to deals that were initiated because an investment banker uttered the Eight Magic Words: If you don't buy it, your competitors will.

Well, so be it. If a potential acquisition is not compelling to you on its own merits, let it go. Let your competitors put their good money down, and prove that their investment theses are strong.

Let's look at a case in point: [Clear Channel Communications' leaders Lowry, Mark and Randall] Mayses' decision to move from radios into outdoor advertising (billboards, to most of us). Based on our conversations with Randall Mays, we summarize their investment thesis for buying into the billboard business as follows:

Clear Channel's expansion into outdoor advertising leverages the company's core competencies in two ways: First, the local market sales force that is already in place to sell radio ads can now sell outdoor ads to many of the same buyers, and Clear Channel is uniquely positioned to sell both local and national advertisements. Second, similar to the radio industry twenty years ago, the outdoor advertising industry is fragmented and undercapitalized. Clear Channel has the capital needed to "roll up" a significant fraction of this industry, as well as the cash flow and management systems needed to reduce operating expenses across a consolidated business.

Note that in Clear Channel's investment thesis (at least as we've stated it), the benefits would be derived from three sources:

Leveraging an existing sales force more extensively
Using the balance sheet to roll up and fund an undercapitalized business
Applying operating skills learned in the radio trade

Note also the emphasis on tangible and quantifiable results, which can be easily communicated and tested. All stakeholders, including investors, employees, debtors and vendors, should understand why a deal will make their company stronger. Does the investment thesis make sense only to those who know the company best? If so, that's probably a bad sign. Is senior management arguing that a deal's inherent genius is too complex to be understood by all stakeholders, or simply asserting that the deal is "strategic"? These, too, are probably bad signs.

Most of the best acquirers we've studied try to get the thesis down on paper as soon as possible. Getting it down in black and white—wrapping specific words around the ideas—allows them to circulate the thesis internally and to generate reactions early and often.

The perils of the "transformational" deal. Some readers may be wondering whether there isn't a less tangible, but equally credible, rationale for an investment thesis: the transformational deal. Such transactions, which became popular in the exuberant '90s, aim to turn companies (and sometimes even whole industries) on their head and "transform" them. In effect, they change a company's basis of competition through a dramatic redeployment of assets.

The roster of companies that have favored transformational deals includes Vivendi Universal, AOL Time Warner (which changed its name back to Time Warner in October 2003), Enron, Williams, and others. Perhaps that list alone is enough to turn our readers off the concept of the transformational deal. (We admit it: We keep wanting to put that word transformational in quotes.) But let's dig a little deeper.

Sometimes what looks like a successful transformational deal is really a case of mistaken identity. In search of effective transformations, people sometimes cite the examples of DuPont—which after World War I used M&A to transform itself from a maker of explosives into a broad-based leader in the chemicals industry—and General Motors, which, through the consolidation of several car companies, transformed the auto industry. But when you actually dissect the moves of such industry winners, you find that they worked their way down the same learning curve as the best-practice companies in our global study. GM never attempted the transformational deal; instead, it rolled up smaller car companies until it had the scale to take on a Ford—and win. DuPont was similarly patient; it broadened its product scope into a range of chemistry-based industries, acquisition by acquisition.

In a more recent example, Rexam PLC has transformed itself from a broad-based conglomerate into a global leader in packaging by actively managing its portfolio and growing its core business. Beginning in the late '90s, Rexam shed diverse businesses in cyclical industries and grew scale in cans. First it acquired Europe's largest beverage—can manufacturer, Sweden's PLM, in 1999. Then it bought U.S.-based packager American National Can in 2000, making itself the largest beverage-can maker in the world. In other words, Rexam acquired with a clear investment thesis in mind: to grow scale in can making or broaden geographic scope. The collective impact of these many small steps was transformation. 14

But what of the literal transformational deal? You saw the preceding list of companies. Our advice is unequivocal: Stay out of this high-stakes game. Recent efforts to transform companies via the megadeal have failed or faltered. The glamour is blinding, which only makes the route more treacherous and the destination less clear. If you go this route, you are very likely to destroy value for your shareholders.

By definition, the transformational deal can't have a clear investment thesis, and evidence from the movement of stock prices immediately following deal announcements suggests that the market prefers deals that have a clear investment thesis. In "Deals That Create Value," for example, McKinsey scrutinized stock price movements before and after 231 corporate transactions over a five-year period. The study concluded that the market prefers "expansionist" deals, in which a company "seeks to boost its market share by consolidating, by moving into new geographic regions, or by adding new distribution channels for existing products and services."

On average, McKinsey reported, deals of the "expansionist" variety earned a stock market premium in the days following their announcement. By contrast, "transformative" deals—whereby companies threw themselves bodily into a new line of business—destroyed an average of 5.3% of market value immediately after the deal's announcement. Translating these findings into our own terminology:

Expansionist deals are more likely to have a clear investment thesis, while "transformative" deals often have no credible rationale.
The market is likely to reward the former and punish the latter.
The dilution/accretion debate. One more side discussion that comes to bear on the investment thesis: Deal making is often driven by what we'll call the dilution/accretion debate. We will argue that this debate must be taken into account as you develop your investment thesis, but your thesis making should not be driven by this debate.

Sometimes what looks like a successful transformational deal is really a case of mistaken identity. Simply put, a deal is dilutive if it causes the acquiring company to have lower earnings per share (EPS) than it had before the transaction. As they teach in Finance 101, this happens when the asset return on the purchased business is less than the cost of the debt or equity (e.g., through the issuance of new shares) needed to pay for the deal. Dilution can also occur when an asset is sold, because the earnings power of the business being sold is greater than the return on the alternative use of the proceeds (e.g., paying down debt, redeeming shares or buying something else). An accretive deal, of course, has the opposite outcomes.

But that's only the first of two shoes that may drop. The second shoe is, How will Wall Street respond? Will investors punish the company (or reward it) for its dilutive ways?

Aware of this two-shoes-dropping phenomenon, many CEOs and CFOs use the litmus test of earnings accretion/dilution as the first hurdle that should be put in front of every proposed deal. One of these skilled acquirers is Citigroup's [former] CFO Todd Thomson, who told us:

It's an incredibly powerful discipline to put in place a rule of thumb that deals have to be accretive within some [specific] period of time. At Citigroup, my rule of thumb is it has to be accretive within the first twelve months, in terms of EPS, and it has to reach our capital rate of return, which is over 20% return within three to four years. And it has to make sense both financially and strategically, which means it has to have at least as fast a growth rate as we expect from our businesses in general, which is 10 to 15% a year.

Now, not all of our deals meet that hurdle. But if I set that up to begin with, then if [a deal is] not going to meet that hurdle, people know they better make a heck of a compelling argument about why it doesn't have to be accretive in year one, or why it may take year four or five or six to be able to hit that return level.

Unfortunately, dilution is a problem that has to be wrestled with on a regular basis. As Mike Bertasso, the head of H. J. Heinz's Asia-Pacific businesses, told us, "If a business is accretive, it is probably low-growth and cheap for a reason. If it is dilutive, it's probably high-growth and attractive, and we can't afford it." Even if you can't afford them, steering clear of dilutive deals seems sensible enough, on the face of it. Why would a company's leaders ever knowingly take steps that would decrease their EPS?

The answer, of course, is to invest for the future. As part of the research leading up to this book, Bain looked at a hundred deals that involved EPS accretion and dilution. All the deals were large enough and public enough to have had an effect on the buyer's stock price. The result was surprising: First-year accretion and dilution did not matter to shareholders. In other words, there was no statistical correlation between future stock performance and whether the company did an accretive or dilutive deal. If anything, the dilutive deals slightly outperformed. Why? Because dilutive deals are almost always involved in buying higher-growth assets, and therefore by their nature pass Thomson's test of a "heck of a compelling argument."

As a rule, investors like to see their companies investing in growth. We believe that investors in the stock market do, in fact, look past reported EPS numbers in an effort to understand how the investment thesis will improve the business they already own. If the investment thesis holds up to this kind of scrutiny, then some short-term dilution is probably acceptable.

Reprinted with permission of Harvard Business School Press. Mastering the Merger: Four Critical Decisions That Make or Break the Deal , by David Harding and Sam Rovit. Copyright 2004 Bain & Company; All Rights Reserved.

David Harding (HBS MBA '84) is a director in Bain & Company's Boston office and is an expert in corporate strategy and organizational effectiveness.

Sam Rovit (HBS MBA '89) is a director in the Chicago office and leader of Bain & Company's Global Mergers and Acquisitions Practice.

10. Joe Trustey, telephone interview by David Harding, Bain & Company. Boston: 13 May 2003. Subsequent comments by Trustey are also from this interview.

11. Accenture, "Accenture Survey Shows Executives Are Cautiously Optimistic Regarding Future Mergers and Acquisitions," Accenture Press Release, 30 May 2002.

12. John R. Harbison, Albert J. Viscio, and Amy T. Asin, "Making Acquisitions Work: Capturing Value After the Deal," Booz Allen & Hamilton Series of View-points on Alliances, 1999.

13. Craig Tall, telephone interview by Catherine Lemire, Bain & Company. Toronto: 1 October 2002.

14. Rolf Börjesson, interview by Tom Shannon, Bain & Company. London: 2001.

15. Hans Bieshaar, Jeremy Knight, and Alexander van Wassenaer, "Deals That Create Value," McKinsey Quarterly 1 (2001).

16. Todd Thomson, speaking on "Strategic M&A in an Opportunistic Environment." (Presentation at Bain & Company's Getting Back to Offense conference, New York City, 20 June 2002.)

17. Mike Bertasso, correspondence with David Harding, 15 December 2003.

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What Is an Investment Thesis?

Understanding the Thesis

Special Considerations

What's Included?

The Bottom Line

Portfolio Management

Investment Thesis: An Argument in Support of Investing Decisions

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

The term investment thesis refers to a reasoned argument for a particular investment strategy, backed up by research and analysis. Investment theses are commonly prepared by (and for) individual investors and businesses. These formal written documents may be prepared by analysts or other financial professionals for presentation to their clients.

Key Takeaways

An investment thesis is a written document that recommends a new investment, based on research and analysis of its potential for profit.
Individual investors can use this technique to investigate and select investments that meet their goals.
Financial professionals use the investment thesis to pitch their ideas.

Understanding the Investment Thesis

As noted above, an investment thesis is a written document that provides information about a potential investment. It is a research- and analysis-based proposal that is usually drafted by an investment or financial professional to provide insight into investments and to pitch investment ideas. In some cases, the investor will draft their own investment thesis, as is the case with venture capitalists and private equity firms.

This thesis can be used as a strategic decision-making tool. Investors and companies can use a thesis to decide whether or not to pursue a particular investment, such as a stock or acquiring another company. Or it can be used as a way to look back and analyze why a particular decision was made in the first place—and whether it was the right one. Putting things in writing can have a huge impact on the direction of a potential investment.

Let's say an investor purchases a stock based on the investment thesis that the stock is undervalued . The thesis states that the investor plans to hold the stock for three years, during which its price will rise to reflect its true worth. At that point, the stock will be sold at a profit. A year later, the stock market crashes, and the investor's pick crashes with it. The investor recalls the investment thesis, relies on the integrity of its conclusions, and continues to hold the stock.

That is a sound strategy unless some event that is totally unexpected and entirely absent from the investment thesis occurs. Examples of these might include the 2007-2008 financial crisis or the Brexit vote that forced the United Kingdom out of the European Union (EU) in 2016. These were highly unexpected events, and they might affect someone's investment thesis.

If you think your investment thesis holds up, stick with it through thick and thin.

An investment thesis is generally formally documented, but there are no universal standards for the contents. Some require fast action and are not elaborate compositions. When a thesis concerns a big trend, such as a global macro perspective, the investment thesis may be well documented and might even include a fair amount of promotional materials for presentation to potential investing partners.

Portfolio management is now a science-based discipline, not unlike engineering or medicine. As in those fields, breakthroughs in basic theory, technology, and market structures continuously translate into improvements in products and in professional practices. The investment thesis has been strengthened with qualitative and quantitative methods that are now widely accepted.

As with any thesis, an idea may surface but it is methodical research that takes it from an abstract concept to a recommendation for action. In the world of investments, the thesis serves as a game plan.

What's Included in an Investment Thesis?

Although there's no industry standard, there are usually some common components to this document. Remember, an investment thesis is generally a proposal that is based on research and analysis. As such, it is meant to be a guide about the viability of a particular investment.

Most investment theses include (but aren't limited to) the following information:

The investment in question
The investment goal(s)
Viability of the investment, including any trends that support the investment
Potential downsides and risks that may be associated with the investment
Costs and potential returns as well as any losses that may result

Some theses also try to answer some key questions, including:

Does the investment align with the intended goal(s)?
What could go wrong?
What do the financial statements say?
What is the growth potential of this investment?

Putting everything in writing can help investors make more informed decisions. For instance, a company's management team can use a thesis to decide whether or not to pursue the acquisition of a rival. The thesis may highlight whether the target's vision aligns with the acquirer or it may identify opportunities for growth in the market.

Keep in mind that the complexity of an investment thesis depends on the type of investor involved and the nature of the investment. So the investment thesis for a corporation looking to acquire a rival may be more in-depth and complicated compared to that of an individual investor who wants to develop an investment portfolio.

Examples of an Investment Thesis

Portfolio managers and investment companies often post information about their investment theses on their websites. The following are just two examples.

Morgan Stanley

Morgan Stanley ( MS ) is one of the world's leading financial services firms. It offers investment management services, investment banking, securities, and wealth management services. According to the company, it has five steps that make up its investment process, including idea generation, quality assessment, valuation, risk management , and portfolio construction.

When it comes to developing its investment thesis, the company tries to answer three questions as part of its quality assessment step:

"Is the company a disruptor or is it insulated from disruptive change?
Does the company demonstrate financial strength with high returns on invested capital, high margins, strong cash conversion, low capital intensity and low leverage?
Are there environmental or social externalities not borne by the company, or governance and accounting risks that may alter the investment thesis?"

Connetic Ventures

Connetic Adventures is a venture capital firm that invests in early-stage companies. The company uses data to develop its investment thesis, which is made up of three pillars. According to its blog, there were three pillars or principles that contributed to Connetic's venture capital investment strategy. These included diversification, value, and follow-on—each of which comes with a pro and con.

Why Is an Investment Thesis Important?

An investment thesis is a written proposal or research-based analysis of why investors or companies should pursue an investment. In some cases, it may also serve as a historical guide as to whether the investment was a good move or not. Whatever the reason, an investment thesis allows investors to make better, more informed decisions about whether to put their money into a specific investment. This written document provides insight into what the investment is, the goals of the investment, any associated costs, the potential for returns, as well as any possible risks and losses that may result.

Who Should Have an Investment Thesis?

An investment thesis is important for anyone who wants to invest their money. Individual investors can use a thesis to decide whether to purchase stock in a particular company and what strategy they should use, whether it's a buy-and-hold strategy or one where they only have the stock for a short period of time. A company can craft its own investment thesis to help weigh out whether an acquisition or growth strategy is worthwhile.

How Do You Create an Investment Thesis?

It's important to put your investment thesis in writing. Seeing your proposal in print can help you make a better decision. When you're writing your investment thesis, be sure to be clear and concise. Make sure you do your research and include any facts and figures that can help you make your decision. Be sure to include your goals, the potential for upside, and any risks that you may come across. Try to ask and answer some key questions, including whether the investment meets your investment goals and what could go wrong if you go ahead with the deal.

It's always important to have a plan, especially when it comes to investing. After all, you are putting your money at risk. Having an investment thesis can help you make more informed decisions about whether a potential investment is worth your while. Make sure you put your thesis in writing and answer some key questions about your goals, costs, and potential outcomes. Having a concrete proposal in place can spell the difference between earning returns and losing all your money. And that's if your thesis supports the investment in the first place.

Harvard Business School. " Writing a Credible Investment Thesis ."

Lanturn. " What is an Investment Thesis and 3 Tips to Make One ."

Morgan Stanley. " Global Opportunity ."

Medium. " The Data That Built Our Fund's Investment Thesis ."

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What Is an Investment Thesis?

Investing is a process. One important task an investor should perform before putting money into an opportunity is to develop an investment thesis. An investment thesis is a written analysis laying out the case for why an investment opportunity should generate a compelling return.

Here's a closer look at how to build an investment thesis and why it's essential to create one.

The importance of creating an investment thesis

Many people make the mistake of investing their hard-earned money into opportunities they don't fully understand. Maybe they received a tip on a hot stock at a party or got caught up in the frenzy of meme stocks and cryptocurrencies on social media. Perhaps that investment has now lost value, and they're not sure whether they should buy more , sell , or continue holding .

An investment thesis can help solve this problem. By creating a thesis on why you believe an investment will deliver an attractive return, you can use it as a guide to determine your next step when the investment experiences a large decline or some disturbing news emerges. You can measure those factors against the original thesis to see if it remains intact.

If the thesis hasn't changed, you can continue holding or potentially increase your investment. However, if you found that the thesis is busted, you can sell your investment and move on.

How to write an investment thesis

It's important to take the time to write a well-thought-out and thoroughly researched investment thesis. That will allow you to easily make sense of it for future reference. Here are four easy steps for writing an investment thesis.

Identify the underlying catalyst at play

The first step in writing an investment thesis is to determine and then outline the catalyst driving your investment thesis. For example, are you interested in the long-term upside from a secular trend or economic supercycle , or a shorter-term rebound from the economic cycle or a bear market ? Write out the primary reason you believe this investment has attractive upside potential.

Assess how the investment is positioned within the catalyst

Next, look at how the particular investment opportunity compares to others that benefit from the same catalyst. Is it the largest publicly traded company focused on this opportunity? Smaller but with more upside potential? Does it align with a particular long-term investment strategy ? Will it help you with balancing your portfolio ? Write out why this investment is a solid choice to benefit from this catalyst.

Consider the biggest risks

As the saying goes, the best-laid plans often go awry. That's why it's vital to consider what will happen to this particular investment opportunity if something goes wrong. Some examples to consider:

Can it withstand a recession ?
Could Congress enact legislation that would damage its prospects?
Is there a lot of competition within the industry?
Does it have too much debt, volatile cash flows, or an otherwise weaker financial profile?
Is the price high? Could that result in underperformance if the catalyst doesn't play out according to plan?

Consider and jot down anything that could negatively impact this investment.

Determine your conviction level

Finally, write down your expected return from this investment and how much conviction you have in its ability to achieve that return. Then, given the catalyst, its position within that catalyst, the risk/reward profile, and your conviction level, is it worth the investment?

By going through these steps and writing a detailed investment thesis, you can proceed with confidence. Further, you can reference it in the future to ensure your thesis is playing out as expected. If not, you can make changes to your investment.

Investment thesis examples

An investment thesis doesn't need to be that long. It just needs to contain the most important factors driving your decision to invest in a particular opportunity. Here's a simplified example based on my investment thesis for Brookfield Renewable ( BEP -0.63% )( BEPC 0.39% ), one of my largest holdings:

Renewable energy is one of the biggest megatrends of our lifetimes. It will take the global economy three decades and more than $100 trillion of investment to transition its primary power source from fossil fuels to renewable energy.

One of the leaders in this energy transition is Brookfield Renewable. It has one of the largest globally diversified renewable energy platforms and an even bigger pipeline of development projects. Brookfield also has an extensive track record of creating value from the sector, including two decades of steady income and dividend growth , driving superior performance.

Brookfield is also well positioned to navigate the biggest risk facing the industry — access to low-cost capital to finance capital-intensive development projects — due to its rock-solid financial profile backed by a top-notch balance sheet. Given Brookfield's position within this megatrend and its historical success, I have high conviction that it can deliver market-beating total returns for years to come and would consider adding to my position on any meaningful price decline.

This example succinctly lays out the catalyst (the renewable energy megatrend), the investment opportunity's position in the trend (Brookfield is a global leader), its ability to withstand risks (Brookfield has a top-tier financial profile), and my conviction level (high).

An investment thesis isn't just for stocks ; you can craft one for any investment opportunity you're contemplating. For example, you might have the opportunity to invest in a new business venture or a private company. To write an investment thesis for a venture capital or private equity opportunity, you would follow the same outline.

Here's a simplified investment thesis for a new coffee shop:

People love coffee . Demand for the brewed beverage is on track to grow at a more than 8% annual rate through 2025, according to Statista. It also notes that, by 2025, 84% of coffee spending and 21% of the volume consumed will be outside the home. That growing market will benefit coffee shops.

This particular shop would be the first one in a trendy area of downtown that's undergoing a dramatic revitalization. While restaurant retail can be brutal, the group starting the coffee shop has opened several profitable locations around the city in recent years. Their past success, when combined with the coffee industry's growth, suggests this new shop should thrive. Because of that, you have a high conviction that this investment will earn a much greater return than if you invested the money in another retail opportunity.

With this venture capital investment thesis we've:

Identified the catalyst: Growing demand for out-of-home coffee consumption.
Classified this particular investment opportunity's position within the catalyst: First mover in a trendy area.
Determine all the risks facing this venture: Retail is brutal.
Considered the conviction level: High compared to other retail opportunities.

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An investment thesis can make you a more successful investor

Thinking through and crafting a thoroughly researched investment thesis can help you make better informed investing decisions. While it's best to write one before you invest, you can also create one for existing holdings. The investment thesis will serve as a guide allowing you to measure whether the opportunity is living up to your thesis — suggesting you hold or buy more — or if that's no longer the case, and it's time to sell.

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Investment Thesis: Definition, Components and How to Prepare One

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What is an investment thesis, the role of an investment thesis in investment decision-making, tailoring your investment thesis to your financial goals, components of a strong investment thesis, market research and analysis, target investment criteria, risk assessment and mitigation, expected returns and exit strategy, alignment with your risk tolerance and time horizon, building your investment thesis, conducting comprehensive market research, defining your investment objectives, selecting the right assets or securities, creating a clear investment strategy, addressing potential risks, implementing your investment thesis, portfolio diversification, monitoring and reviewing your investments, adapting your thesis to market changes, tracking progress towards your goals, evaluating the success of your investment thesis, measuring performance against initial projections, identifying key milestones, learning from both successes and failures, what is the difference between an investment thesis and a strategy, how often should i revisit and adjust my investment thesis, can i have multiple investment theses for different investment goals, what should i do if my investment thesis is not yielding expected results, key takeaways.

An investment thesis is a crucial tool for guiding your investment decisions and achieving your financial goals.
Building a strong investment thesis involves in-depth research, clear objectives, careful risk assessment, and alignment with your risk tolerance and time horizon.
Implementing your thesis requires portfolio diversification, monitoring, adaptation to market changes, and tracking your progress.
Regularly evaluate the success of your investment thesis by measuring performance, identifying milestones, and learning from your experiences.

Community reviews are used to determine product recommendation ratings, but these ratings are not influenced by partner compensation. SuperMoney checks for and removes fake reviews when identified.

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What is an investment thesis?

Why you need a solid investment thesis, how to write an investment thesis , step one: determine your minimum viable fund size, step two: pinpoint your investment focus, step three: portfolio construction , how to present your fund thesis to lps, investment thesis example.

Breaking into the venture capital ecosystem is both challenging and competitive. Having a great investment thesis is key to running a successful VC fund. Without a clear investment strategy and effective portfolio construction , your fund won’t get very far.

In this article, we’ll cover how you can develop a strong investment thesis.

In private equity and venture capital , an investment thesis (sometimes called a fund thesis or fund strategy) outlines how you plan to use invested capital to generate returns. Your investment thesis clarifies how you’ll make money for the investors in your fund—it’s a definition of what your fund will do.

Your investment thesis may include:

Your fund size

The number of companies in your portfolio

The stages and industries of those companies

The geographies those companies are located in

The differentiated way your fund will support your portfolio companies

Your average check size

The amount of capital reserved for follow-on investments

The return profile for your fund, based on the size of the stakes you’re trying to take in each company and your estimated success rate

How the fund will set itself apart from similarly sized or focused funds

An investment thesis tells a story by describing how each of these elements work together.

Your fund’s investment thesis explains how you’ll cooperate with, compete with, and differentiate from other venture funds. An effective fund investment thesis is realistic and sustainable. It aligns with your investment team’s network of professional contacts (which provides access to deals), untapped opportunities in new and existing markets, and your LPs’ investment interests.

Your fund thesis also supports compliance with the “ venture capital fund ” definition under the Investment Advisers Act of 1940 , which is important if you plan to rely on the related regulatory exemption for private funds.

Creating your own fund investment thesis involves determining fund size, investment focus, and portfolio construction.

The size of your fund influences almost every element of your investment strategy: The number of companies in your portfolio, your check size, the amount of reserve capital you have, and the return profile for your fund. Fund size also affects the types of LPs you attract and helps determine your fund’s portfolio management fees, which then dictate the operational expenses you can realistically support.

Competitive research

To determine your ideal fund size, start by researching funds with goals and benchmarks like yours to see how they’re faring. You may also want to research successful funds across a handful of different industries and sectors to see what works. You can learn more information about funds by subscribing to trade publications, reading press releases from funds when they close, or on social media.

Once you’ve settled on a fund size, the next step is to outline the stage, industry, and location you’ll invest in. Articulating your investment focus helps narrow your aim and convince limited partners (LP) with interests in these sectors and stages to get on board with your strategy. It also makes it easier for founders who meet your parameters to identify your fund as a potential investor—and discourages founders who aren’t a good fit from pitching your firm.

At what point in a company’s life cycle do you want to invest and offer guidance? If you’re interested in being a sounding board for early-stage companies who are just getting started, you might want to invest at the pre-seed , seed , or Series A stages. However, if you prefer to work with companies that already have steady revenue and an established business model, you’ll probably want to focus on a later stage.

Ultimately, the stage where you can focus your investments will be a function of your fund size and the anticipated number of companies in your portfolio. So keep this top of mind when building out your minimal viable fund size.

Which sectors are you interested in? Do you plan to target a specific industry—like healthcare, fintech, or real estate—or focus on companies across a handful of different industries?

Where are the companies you’ll be investing in? What particular challenges and assets do they have because of where they operate? You may choose to invest in local companies if you already have a deep network of contacts nearby. On the other hand, if you’re open to traveling, or want to capitalize on emerging, international, or underserved markets, you may want to expand your reach. This may also apply if your fund’s investment thesis is based on industry, for example, so you may be agnostic to geography.

Other considerations

Depending on your investment goals, you might have other criteria to look at, like a company’s social impact, environmental influence, or commitment to diversity, equity, and inclusion.

A thoughtful portfolio is critical to running a successful fund and shaping your overall investment thesis. Your strategy for portfolio construction signals to LPs how you plan to allocate their capital across investments. Your fund’s investment portfolio is essentially the roadmap for the life of the fund. It spells out the number of companies you’ll invest in, the amount of capital you’ll pour into each company, your target ownership for each company, how much you’ll set aside for initial investments, and how much you’ll reserve for follow-on investments.

Portfolio construction is made up of the following elements:

Investment focus

Diversification: Types of companies you’ll invest in and what percent of the fund will be for non-qualifying investments or investments outside the thesis

Check size: The amount you’ll invest in each company

Investment horizon: How long you have to allocate the capital and how long you’ll hold each investment

Expected returns: How much you expect to return on the capital invested

Investor requirements: Maximum or minimum contributions

A good rule of practice is to ensure that your investments align with your portfolio construction model before making each investment decision, and then actively thereafter. Set aside time to regularly evaluate whether your investments align with your model, and where to course-correct. If your investments deviate from your original thesis, you’ll need to adjust your model or reset your focus. This is particularly important to track if you include a specific investment thesis in your fund’s legal documents.

Learn more about how to create a portfolio construction strategy

Most VCs prepare versions of their fund thesis that go into different levels of detail, ranging from a one-sentence elevator pitch, like the example below, to a full pitch deck.

You should be able to sum up your fund strategy in one or two straightforward sentences. Here’s an example investment thesis from a hypothetical venture fund:

“Krakatoa Ventures is raising a $25 million seed fund to back U.S.-based startups focused on climate technology and earth sciences. The fund will capitalize a highly specialized network of climate scientists the general partners developed during their two decades of academic study in volcanology and climatology.”

→Ready to make a full pitch deck for LPs? Prepare for your next meeting with investors using our free pitch deck template and example pitch decks .

This example highlights a key aspect of a great fund strategy: It shouldn’t be a thesis that just anybody can go out and execute. Your edge, such as your personal experience and network, are integral parts of the plan. Articulate why you’re better positioned than anyone else to execute your investment thesis.

Investment Thesis

What Is an Investment Thesis?

An investment thesis is a contemplated contention for a specific investment strategy, backed up by research and analysis. In the financial world, an analyst might prepare a formal document framing an investment thesis for show to expected investors or an investment committee.

An investment thesis can assist individual investors with assessing investment thoughts and select the ones that can best assist them with meeting their investment objectives.

Likewise with any thesis, a thought might surface yet calculated research takes it from an abstract concept to a recommendation for action. In the world of investments, the thesis fills in as a game plan.

Grasping the Investment Thesis

Most investment proposals are written down, and can be utilized to think back and examine the reason why a specific decision was made in any case — and whether it was the right one.

Suppose an investor purchases a stock in light of the investment thesis that the stock is undervalued. The thesis further states that the investor plans to hold the stock for a very long time, during which its price will rise to mirror its true worth. By then, the stock will be sold at a profit.

After a year, the stock market slumps and the investor's pick crashes with it. The investor reviews the investment thesis, depends on the integrity of its decisions, and keeps on holding the stock.

That is a sound strategy except if some event that is absolutely startling and totally missing from the investment thesis happens. Instances of these could incorporate the 2007-2008 global financial crisis or the Brexit vote that forced Great Britain out of the European Union in 2016. These were exceptionally unforeseen events, and they could influence somebody's investment thesis.

On the off chance that you think your investment thesis holds up, stick with it through various challenges.

As markets at any point develop, so do the thoughts and strategies investment professionals accept are best fit to make the most of growth and value creation opportunities.

Documenting an Investment Thesis

An investment thesis is generally formally documented, however there are no universal standards for the items. Some require fast action and are not intricate sytheses. At the point when a thesis concerns a big trend, for example, a global macro viewpoint, the investment thesis might be legitimate and could even incorporate a fair amount of promotional materials for show to potential investing partners.

In the last couple of many years, portfolio management has turned into a science-based discipline, much the same as engineering or medication. As in those fields, leap forwards in fundamental theory, technology, and market structures constantly convert into improvements in products and in professional practices. The investment thesis has been reinforced with qualitative and quantitative methods that are presently widely accepted.

Financial professionals utilize the investment thesis to pitch their thoughts.
Individual investors can utilize this technique to investigate and choose investments that meet their objectives.
An investment thesis is a written document that suggests another investment, in light of research and analysis of its true capacity for profit.

Writing a Credible Investment Thesis

by David Harding and Sam Rovit

Every deal your company proposes to do—big or small, strategic or tactical—should start with a clear statement how that particular deal would create value for your company. We call this the investment thesis . The investment thesis is no more or less than a definitive statement, based on a clear understanding of how money is made in your business, that outlines how adding this particular business to your portfolio will make your company more valuable. Many of the best acquirers write out their investment theses in black and white. Joe Trustey, managing partner of private equity and venture capital firm Summit Partners, describes the tool in one short sentence: "It tells me why I would want to own this business." 10

Perhaps you're rolling your eyes and saying to yourself, "Well, of course our company uses an investment thesis!" But unless you're in the private equity business—which in our experience is more disciplined in crafting investment theses than are corporate buyers—the odds aren't with you. For example, our survey of 250 senior executives across all industries revealed that only 29 percent of acquiring executives started out with an investment thesis (defined in that survey as a "sound reason for buying a company") that stood the test of time. More than 40 percent had no investment thesis whatsoever (!). Of those who did, fully half discovered within three years of closing the deal that their thesis was wrong.

Studies conducted by other firms support the conclusion that most companies are terrifyingly unclear about why they spend their shareholders' capital on acquisitions. A 2002 Accenture study, for example, found that 83 percent of executives surveyed admitted they were unable to distinguish between the value levers of M&A deals. 11 In Booz Allen Hamilton's 1999 review of thirty-four frequent acquirers, which focused chiefly on integration, unsuccessful acquirers admitted that they fished in uncharted waters. 12 They ranked "learning about new (and potentially related) business areas" as a top reason for making an acquisition. (Surely companies should know whether a business area is related to their core before they decide to buy into it!) Successful acquirers, by contrast, were more likely to cite "leading or responding to industry restructuring" as a reason for making an acquisition, suggesting that these companies had at least thought through the strategic implications of their moves.

A credible investment thesis should describe a concrete benefit, rather than a vaguely stated strategic value.

This point needs underscoring. Justifying a deal as being "strategic" ex post facto is, in most cases, an invitation to inferior returns. Given how frequently we have heard weak "strategic" justifications after a deal has closed, it's worth passing along a warning from Craig Tall, vice chair of corporate development and strategic planning at Washington Mutual. In recent years, Tall's bank has made acquisitions a key part of a stunningly successful growth record. "When I see an expensive deal," Tall told us, "and they say it was a 'strategic' deal, it's a code for me that somebody paid too much." 13

Well, so be it. If a potential acquisition is not compelling to you on its own merits, let it go. Let your competitors put their good money down, and prove that their investment theses are strong.

Let's look at a case in point: [Clear Channel Communications' leaders Lowry, Mark, and Randall] Mayses' decision to move from radios into outdoor advertising (billboards, to most of us). Based on our conversations with Randall Mays, we summarize their investment thesis for buying into the billboard business as follows:

Clear Channel's expansion into outdoor advertising leverages the company's core competencies in two ways: First, the local market sales force that is already in place to sell radio ads can now sell outdoor ads to many of the same buyers, and Clear Channel is uniquely positioned to sell both local and national advertisements. Second, similar to the radio industry twenty years ago, the outdoor advertising industry is fragmented and undercapitalized. Clear Channel has the capital needed to "roll up" a significant fraction of this industry, as well as the cash flow and management systems needed to reduce operating expenses across a consolidated business.

Note that in Clear Channel's investment thesis (at least as we've stated it), the benefits would be derived from three sources:

Leveraging an existing sales force more extensively
Using the balance sheet to roll up and fund an undercapitalized business
Applying operating skills learned in the radio trade

Note also the emphasis on tangible and quantifiable results, which can be easily communicated and tested. All stakeholders, including investors, employees, debtors, and vendors, should understand why a deal will make their company stronger. Does the investment thesis make sense only to those who know the company best? If so, that's probably a bad sign. Is senior management arguing that a deal's inherent genius is too complex to be understood by all stakeholders, or simply asserting that the deal is "strategic"? These, too, are probably bad signs.

The perils of the "transformational" deal . Some readers may be wondering whether there isn't a less tangible, but equally credible, rationale for an investment thesis: the transformational deal. Such transactions, which became popular in the exuberant '90s, aim to turn companies (and sometimes even whole industries) on their head and "transform" them. In effect, they change a company's basis of competition through a dramatic redeployment of assets.

In a more recent example, Rexam PLC has transformed itself from a broad-based conglomerate into a global leader in packaging by actively managing its portfolio and growing its core business. Beginning in the late '90s, Rexam shed diverse businesses in cyclical industries and grew scale in cans. First it acquired Europe's largest beverage-can manufacturer, Sweden's PLM, in 1999. Then it bought U.S.–based packager American National Can in 2000, making itself the largest beverage-can maker in the world. In other words, Rexam acquired with a clear investment thesis in mind: to grow scale in can making or broaden geographic scope. The collective impact of these many small steps was transformation. 14

By definition, the transformational deal can't have a clear investment thesis, and evidence from the movement of stock prices immediately following deal announcements suggests that the market prefers deals that have a clear investment thesis. In "Deals That Create Value," for example, McKinsey scrutinized stock price movements before and after 231 corporate transactions over a five-year period. 15 The study concluded that the market prefers "expansionist" deals, in which a company "seeks to boost its market share by consolidating, by moving into new geographic regions, or by adding new distribution channels for existing products and services."

On average, McKinsey reported, deals of the "expansionist" variety earned a stock market premium in the days following their announcement. By contrast, "transformative" deals—whereby companies threw themselves bodily into a new line of business—destroyed an average of 5.3 percent of market value immediately after the deal's announcement. Translating these findings into our own terminology:

Expansionist deals are more likely to have a clear investment thesis, while "transformative" deals often have no credible rationale.
The market is likely to reward the former and punish the latter.

The dilution/accretion debate . One more side discussion that comes to bear on the investment thesis: Deal making is often driven by what we'll call the dilution/accretion debate . We will argue that this debate must be taken into account as you develop your investment thesis, but your thesis making should not be driven by this debate.

Sometimes what looks like a successful transformational deal is really a case of mistaken identity.

Simply put, a deal is dilutive if it causes the acquiring company to have lower earnings per share (EPS) than it had before the transaction. As they teach in Finance 101, this happens when the asset return on the purchased business is less than the cost of the debt or equity (e.g., through the issuance of new shares) needed to pay for the deal. Dilution can also occur when an asset is sold, because the earnings power of the business being sold is greater than the return on the alternative use of the proceeds (e.g., paying down debt, redeeming shares, or buying something else). An accretive deal, of course, has the opposite outcomes.

But that's only the first of two shoes that may drop. The second shoe is, How will Wall Street respond? Will investors punish the company (or reward it) for its dilutive ways?

It's an incredibly powerful discipline to put in place a rule of thumb that deals have to be accretive within some [specific] period of time. At Citigroup, my rule of thumb is it has to be accretive within the first twelve months, in terms of EPS, and it has to reach our capital rate of return, which is over 20 percent return within three to four years. And it has to make sense both financially and strategically, which means it has to have at least as fast a growth rate as we expect from our businesses in general, which is 10 to 15 percent a year. Now, not all of our deals meet that hurdle. But if I set that up to begin with, then if [a deal is] not going to meet that hurdle, people know they better make a heck of a compelling argument about why it doesn't have to be accretive in year one, or why it may take year four or five or six to be able to hit that return level. 16

Unfortunately, dilution is a problem that has to be wrestled with on a regular basis. As Mike Bertasso, the head of H. J. Heinz's Asia-Pacific businesses, told us, "If a business is accretive, it is probably low-growth and cheap for a reason. If it is dilutive, it's probably high-growth and attractive, and we can't afford it." 17 Even if you can't afford them, steering clear of dilutive deals seems sensible enough, on the face of it. Why would a company's leaders ever knowingly take steps that would decrease their EPS?

[ Buy this book ]

David Harding (HBS MBA '84) is a director in Bain & Company's Boston office and is an expert in corporate strategy and organizational effectiveness.

Sam Rovit (HBS MBA '89) is a director in the Chicago office and leader of Bain & Company's Global Mergers and Acquisitions Practice.

10. Joe Trustey, telephone interview by David Harding, Bain & Company. Boston: 13 May 2003. Subsequent comments by Trustey are also from this interview.

11. Accenture, "Accenture Survey Shows Executives Are Cautiously Optimistic Regarding Future Mergers and Acquisitions," Accenture Press Release, 30 May 2002.

12. John R. Harbison, Albert J. Viscio, and Amy T. Asin, "Making Acquisitions Work: Capturing Value After the Deal," Booz Allen & Hamilton Series of View-points on Alliances, 1999.

13. Craig Tall, telephone interview by Catherine Lemire, Bain & Company. Toronto: 1 October 2002.

14. Rolf BÃ¶rjesson, interview by Tom Shannon, Bain & Company. London: 2001.

15. Hans Bieshaar, Jeremy Knight, and Alexander van Wassenaer, "Deals That Create Value," McKinsey Quarterly 1 (2001).

16. Todd Thomson, speaking on "Strategic M&A in an Opportunistic Environment." (Presentation at Bain & Company's Getting Back to Offense conference, New York City, 20 June 2002.)

17. Mike Bertasso, correspondence with David Harding, 15 December 2003.

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Investment Thesis Template

Create your own investment thesis slide with this free template

Prior to becoming a Founder for Curiocity, Hassan worked for Houlihan Lokey as an Investment Banking Analyst focusing on sellside and buyside M&A , restructurings, financings and strategic advisory engagements across industry groups.

Hassan holds a BS from the University of Pennsylvania in Economics.

Currently, Adin is an associate at Berkshire Partners, an $16B middle-market private equity fund. Prior to joining Berkshire Partners, Adin worked for just over three years at The Boston Consulting Group as an associate and consultant and previously interned for the Federal Reserve Board and the U.S. Senate.

Adin graduated from Yale University, Magna Cum Claude, with a Bachelor of Arts Degree in Economics.

This template allows you to create your own investment thesis slide detailing your overall strategy.

The template is plug-and-play , and you can enter your own text or numbers. The template also includes other slide pages for other elements of a financial model presentation.

According to the WSO Dictionary ,

"An investment thesis aims to take an abstract idea and turn it into a functional investment strategy. An investment thesis helps investors evaluate investment ideas, ideally guiding them in selecting the best ideas that can help meet their investment objectives."

A screenshot below gives you a sneak peek of the template.

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How to Develop a Strong Investment Thesis in Early Stage

Discover the eight steps to develop a strong investment thesis. Make informed, profitable decisions as a private investor with our guide.

December 20, 2022

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A well-crafted investment thesis can help investors clarify their goals and evaluate potential investments, ultimately leading to a successful performance of the fund.

What exactly is an investment thesis, and why is it so important?

An investment thesis is a concise statement that outlines an investor's belief about the potential returns and risks of a particular investment. It is a framework that helps investors make decisions about what to buy, sell, or hold in their portfolio, and it is based on a thorough analysis of a company's financials, market conditions, and competitive landscape.

A well-crafted investment thesis can serve as a valuable guide for investors to focus on their long-term goals and avoid making impulsive or reactive decisions based on short-term market fluctuations. By clearly defining their investment goals and criteria, investors can avoid being swayed by emotions or biases and instead make rational and thoughtful decisions.

How can private investors develop a strong investment thesis?

Here are eight steps to follow:

1. Start by identifying the specific industry or market that you want to invest in. This should be based on your own interests, expertise, and goals as an investor.

2. Research the current state of the market , including trends, challenges, and opportunities. This will help you identify potential investment opportunities and develop a more informed investment thesis.

3. Evaluate the potential investment opportunities in the market, including the founding team, product, and business model of the startups. Look for startups that have strong potential for growth and differentiation in the market.

4. Develop a set of hypotheses or assumptions about the potential returns and risks of investing in early stage startups in the chosen market. This should be based on your research and analysis, and should include both the potential upsides and risks of the investment.

5. Test your hypotheses by gathering additional information and data, and by seeking the perspectives of other experienced investors. This may involve conducting interviews, attending industry conferences, or seeking out expert opinions.

6. Refine your thesis as needed based on the information and insights you gather. Be prepared to adjust your assumptions and expectations as new information becomes available.

7. Communicate your investment thesis clearly and concisely to others, including potential partners or investors. This should include a detailed explanation of your reasoning and a solid plan for realizing the potential returns of the investment.

8. Monitor the performance of the startups you invest in closely, and be prepared to adjust your thesis or exit the investment if it no longer aligns with your goals or if the underlying assumptions change.

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We are excited to keep you posted throughout our journey to build the operating system for private market investors . While public markets have come a long way from the time when stock investments were made on costly phone calls, private markets are lagging behind. We want to take out the friction and free up time for fund managers, investors, and founders, allowing them to focus on the projects tackling the challenges of tomorrow. ‍ Subscribe to our newsletter here .

Disclaimer: The content presented herein is solely for informational and discussion purposes only. It is not intended to serve as legal, tax or financial advice or as an endorsement of any investment strategy. bunch does not provide legal, tax or financial advice. Readers should not base their investment decisions on the content presented herein or any other bunch-generated content alone and should seek appropriate professional advice. Nothing contained herein shall constitute or imply an offer to sell, purchase or enter into any transaction in respect of securities. The content contained herein is subject to change without notice. While we aim to present accurate and up-to-date information as part of bunch’s content, we undertake no obligation to update our content from time to time.

Johannes is leading strategic projects at bunch with a particular focus on the German market and the offerings around funds. Prior to joining bunch, he worked for one of Europe's largest and most active Venture Capital funds, building a portfolio of FinTech companies before switching to the operator side.

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Investment Thesis: The Roadmap for Successful Investing

6 min Read June 18, 2024 at 12:47 PM UTC

An investment thesis provides a structured framework to guide the decision-making process of investors, whether individual or institutional.

An investment thesis is a well-reasoned argument that serves as the foundation for making investment decisions.

It is a written document that outlines an investor’s goals, market analysis, risk tolerance, and the specific criteria they will use to evaluate potential investment opportunities.

Essentially, an investment thesis provides a structured framework to guide an investor’s decision-making process.

Why Every Investor Needs an Investment Thesis

An investment thesis is crucial because it helps investors avoid impulsive or emotionally driven investment choices that may not align with their overall objectives.

By establishing clear principles and guidelines, an investment thesis mitigates the risks associated with poorly informed or hasty investment decisions.

Developing a robust investment thesis encourages investors to thoroughly research and analyze the market, industry, and company-specific factors that could impact an investment’s potential for success.

This due diligence process can reveal potential risks or issues that might otherwise be overlooked, ultimately protecting the investor’s capital.

Also Read: Becoming an Investor: Do it Yourself or via a Venture Fund?

Components of an Investment Thesis

While the specific components of an investment thesis may vary depending on the investor’s strategy and preferences, most comprehensive theses include the following elements:

Investment Goals: Clearly defined objectives that the investor aims to achieve through their investments, such as capital appreciation, income generation, or a combination of both.
Risk Tolerance: An assessment of the level of risk the investor is willing to take, which can range from conservative to aggressive.
Market Analysis: A thorough evaluation of the market conditions, trends, and potential opportunities that could impact the investment’s performance.
Industry Analysis: An examination of the specific industry or sector in which the investment opportunity exists, including competitive landscape, regulatory environment, and growth prospects.
Company Analysis: A detailed assessment of the company’s financials, management team, competitive advantage, and growth prospects.
Exit Strategy: A plan for how and when the investor intends to exit the investment, whether through an initial public offering (IPO), acquisition, or other means.

At Daba, we work alongside institutional and individual investors to help develop or refine their Africa-focused investment thesis, providing in-depth market analysis, industry insights, and company-specific assessments. Click here to learn more.

Types of Investment Theses

Investment theses can be categorized into different types, each with its own set of criteria and principles. Some common types include:

Value Investing: This strategy focuses on identifying undervalued companies with strong fundamentals, with the expectation that the market will eventually recognize their true value, resulting in share price appreciation.
Growth Investing: Growth investors seek companies with exceptional growth potential, often in emerging or rapidly expanding industries, to capitalize on their future earnings and revenue growth.
Income Investing: This strategy prioritizes investments that generate consistent income streams, such as dividend-paying stocks, bonds, or real estate investment trusts (REITs).
Socially Responsible Investing: Investors with a socially responsible investment thesis prioritize companies that demonstrate strong environmental, social, and governance (ESG) practices, aligning their investments with their ethical and moral values.

Evolving the Investment Thesis

An investment thesis should not be set in stone; it should be a living document that evolves over time as market conditions, industry trends, and the investor’s goals change.

Regular reviews and updates to the investment thesis are necessary to ensure that it remains relevant and effective.

Developing Investment Theses for Africa

Investing in Africa presents unique opportunities and challenges that require a deep understanding of the continent’s diverse markets, cultures, and regulatory environments.

At Daba, we specialize in helping investors navigate these complexities and develop robust investment theses tailored to the African context.

Our team combines on-the-ground knowledge with rigorous data analysis to provide comprehensive market insights, industry assessments, and company evaluations.

By leveraging our expertise, investors can make informed decisions and build investment theses that are well-aligned with their goals and risk tolerance for African markets.

At Daba, we work with investors to continuously monitor and assess the validity of their investment thesis for African markets. Click here to discover how our analysis and updates can help you make informed investment decisions.

Examples of Investment Thesis

Orange Cote d’ivoire (BRVM: ORAC)

Mobile money is transforming financial inclusion across West Africa. The BRVM-listed company Orange CI is at the forefront of this mobile money revolution through its subsidiary Orange Money.

While traditional banking struggles to reach rural areas, Orange Money’s mobile money services provide easy access to financial tools like payments, transfers, and savings via basic mobile phones. It is a major player in the mobile money market in Africa, operating in 18 countries as of 2020, and is the leader in multiple WAEMU markets.

Orange’s strong brand reputation, widespread mobile network coverage, and strategic partnerships with banks position it well to capitalize on the booming demand for mobile financial services across the region. The company has a stable balance sheet and consistent revenue growth from its core telecom business.

Given this pioneering role in mobile money, powerful market position, and solid financials, the company can deliver attractive returns by riding the mobile money wave sweeping West Africa. Any near-term stock price dips would present an opportune entry point. An investment thesis is not limited to stocks .

Xty Developments (Fictional)

Urbanization is rapidly accelerating across the African continent, creating massive demand for affordable housing solutions, especially in fast-growing cities. Xty Developments is an innovative property company focused on addressing this urban housing crunch.

By using modern construction techniques and embracing a scale model, Xty can construct high-quality yet affordable apartment complexes quickly and cost-effectively. Their standardized designs optimize for efficient building and operational costs.

While new property companies face execution risks, Xty’s founder has over 15 years of proven experience delivering successful projects across multiple African markets. Their current pipeline already includes lucrative developments underway in three major cities.

With rapid urbanization an unstoppable megatrend, Xty’s compelling value proposition, and the founder’s seasoned track record, we have high conviction this venture can generate outsized returns for early investors backing its expansion across key African urban centers.

Also Read: Building a Winning Fund: Portfolio Strategies and Tips

Getting Your Investment Thesis Right

An investment thesis is a critical tool for investors seeking to make well-informed and disciplined investment decisions.

By establishing clear objectives, conducting thorough research and analysis, and defining specific criteria for evaluating opportunities, an investment thesis helps mitigate risks and increase the likelihood of achieving desired returns.

Whether you are an institutional investor, fund manager, or individual investor, partnering with Daba can help you develop or refine your investment thesis for the African market, positioning you for success in this dynamic and rapidly evolving region.

This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Articles do not reflect the views of DABA ADVISORS LLC and do not provide investment advice to Daba’s clients. Daba is not engaged in rendering tax, legal or accounting advice. Please consult a qualified professional for this type of service.

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Investment Thesis: What It Is, How To Write One & Examples

An investment thesis formulates the characteristics and criteria that define a potentially profitable investment. It outlines the reasons behind the investment decision, including various criteria, financial outcomes, and strategies to manage risks. Essentially, it serves as a detailed plan for investors.

What is an Investment Thesis?

An investment thesis serves as a strategic blueprint for investors, guiding their decisions and actions by providing the rationale behind their investment choices. Typically crafted by financial analysts, portfolio managers, or investment professionals, the process begins with a thorough assessment of market potential. This involves scrutinizing trends, growth forecasts, and demand dynamics to identify opportunities. The investment thesis validates the significance of these opportunities by highlighting unmet needs or areas of dissatisfaction within the market.

Furthermore, it quantifies potential gains through meticulous financial scrutiny, including revenue forecasts and return on investment assessments. Beyond identifying opportunities, the investment thesis also plays a crucial role in managing risks by employing risk management tactics such as diversification and contingency plans, helping investors navigate market fluctuations and operational hurdles effectively.

Key Takeaways

An investment thesis defines the criteria for profitable investments, providing a detailed plan and rationale for investors.
An investment thesis serves as a guiding framework for investment decisions, enhancing comprehension and facilitating well-informed choices.
Key components of an investment thesis include identifying the investment opportunity, clarifying goals, evaluating viability and risks, and assessing growth potential.

Understanding the Investment Thesis

An investment thesis is akin to a detailed plan for potential investments, often formulated by finance experts. It entails extensive research and analysis to articulate investment ideas effectively. While typically authored by professionals such as venture capitalists or private equity firms, individuals may also develop their own. This document holds significant importance in facilitating well-informed investment decisions, aiding both investors and companies in evaluating opportunities such as stocks or acquisitions.

By elucidating the reasons for investment, the thesis serves as a guiding framework for investors’ decisions. It streamlines decision-making processes, enhances comprehension of underlying rationales, and provides a means for investors to gauge the performance of their investments. Moreover, an investment thesis functions as a roadmap, charting the course toward successful investments.

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How to write an Investment Thesis

Crafting an investment thesis is essential for all investors, whether individuals or professionals. An investment thesis serves as a guide for making choices, explaining the reasoning behind decisions, and providing a framework for assessing investment opportunities. Here is a simple guide with the most important steps for crafting a good investment thesis:


	Summarize the investment philosophy and its main goals.
	Analyze the market or sector, covering trends, size, growth rates, major players, and recent events.
	Formulate a clear and concise statement of the investment thesis, outlining the opportunity and potential returns.
	Develop a thorough analysis to support the main idea, exploring market dynamics, competition, trends, regulations, and past performance.
	Outline a comprehensive investment strategy. Specify criteria for choosing investments, such as valuation, growth potential, risk tolerance, diversification plans, and how to allocate portfolios.
	Identify and evaluate possible investment risks, such as market, industry, regulatory, and company-specific risks. Also, discuss strategies to mitigate these risks.
	Develop an exit strategy for the investment, outlining desired returns, timeframes, and possible methods of exit such as selling to another company, acquisitions, or selling on the secondary market.
	Describe how investment performance is monitored, including key indicators and success criteria. Also, explain how the strategy adjusts to new information or market changes.

Examples of an Investment Thesis

Portfolio managers and investment companies frequently share their investment strategies on their websites. Here are three examples from prominent investors:

Andreessen Horowitz

Andreessen Horowitz, often referred to as a16z, is a prominent venture capital firm established in 2009 by Marc Andreessen and Ben Horowitz. Active in the private markets, the firm invests in various sectors including AI, healthcare, consumer goods, cryptocurrency, enterprise solutions, fintech, and gaming.

Their investment strategy revolves around observing consumer trends and investing where AI intersects with consumer products. They stress the importance of developing the right AI applications to attract funding, particularly in areas like productivity enhancement and specialized tasks.

In this example, the firm explores how Moore’s Law contrasts with Eroom's Law in healthcare costs. They propose leveraging AI to cut costs and enhance outcomes by gradually integrating it into workflows. Combining AI with life sciences advancements offers transformative opportunities, advocating for a gradual transition to revolutionize healthcare and life sciences. [1]

Goldman Sachs

Goldman Sachs is a global financial powerhouse operating in major financial hubs worldwide, offering services in investment banking, IPO underwriting, securities trading, wealth, and asset management.

The bank’s investment thesis has resulted in a $1 billion investment in companies led by diverse individuals through the “Launch With GS” program aimed at supporting diverse leadership. [2] Goldman Sach collaborates with clients to invest in diverse General Partners across various strategies and offers the Entrepreneur Cohort for growth, reflecting their commitment to diversity and inclusion for achieving strong investment returns and driving industry innovation. [3]

ARK Invest provides ETFs focused on disruptive innovation like AI and blockchain. The firm remains committed to long-term growth, leveraging innovative strategies and deep research across various sectors, including cryptocurrencies.

The Ark Invest thesis revolves around disruptive innovation, targeting transformative technologies nearing tipping points. They focus on five innovation platforms: AI, Robotics, Energy Storage, DNA Sequencing, and Blockchain. Ark Invest’s approach blends top-down and bottom-up research for early innovation capture and long-term value creation. Emphasizing high-conviction bets, long-term investment, and industry focus, Ark Invest anticipates exponential growth to benefit from technological disruptions. [4]

What should be in an investment thesis?

As an important document, an investment thesis explains why an investment opportunity is expected to be profitable. It should include key components to thoroughly analyze and guide decision-making effectively. These 7 pieces of information are indispensable:

The Investment in Question: Identify the reason and the investment opportunity under consideration.
Investment Goal(s): Clarify the investment's aims and aspirations by defining its objectives and goals.
Viability of the Investment: Evaluate the investment's potential, considering any favorable trends or factors.
Potential Downsides and Risks: Address and analyze the risks associated with the investment, highlighting any potential challenges or drawbacks.
Costs and Potential Returns: Evaluate the financial aspects of the investment, including costs, expected returns, and potential losses.
Alignment with Intended Goals: Ensure that the investment aligns with the overall investment objectives and strategies.
Growth Potential: Assess the growth prospects of the investment opportunity.

What is the difference between investment thesis and investment mandate?

An investment thesis is the reasoning behind an investment strategy, based on research and analysis, helping investors make informed decisions. Conversely, an investment mandate is a set of instructions given by an investor to a manager, guiding how to manage funds according to the investor’s goals, risk tolerance, and desired outcomes. Here are the key differences:


	Explain why a certain investment or strategy is likely to succeed.	Define rules for investing.
	Provide an understanding of the investment opportunity, including analysis, risks, and returns.	Provide clear guidance and direction for investment professionals.
	Define Market trends, industry dynamics, company fundamentals, competitive positioning, potential catalysts, and risk factors.	Define Asset classes, geographic regions, industry sectors, investment style, risk tolerance, and compliance guidelines.
	The scope of an investment thesis provides a roadmap for investors, guiding decision-making through research and analysis to aid informed and effective investment choices.	The scope of an investment mandate defines instructions and parameters for managing investments.

What is a trade thesis?

A trading thesis is essentially an idea or argument made by a trader or investor about a particular financial instrument, market or asset. This process explains the reasoning behind a trading decision, considering things like market trends, economic indicators, and technical or fundamental analysis. This thesis acts as a plan for understanding the reasons behind a trade and what factors are likely to influence its outcome, aiding in making informed decisions in financial markets. Having a clear trading thesis helps traders and investors clarify their strategy and evaluate the possible risks and rewards of a trade.

Article Source

Andreessen Horowitz: “ AI at the Intersection: The a16z Investment Thesis on AI in Bio + Health ”
Goldman Sachs: “ Launch With GS ”
Goldman Sachs: “ Goldman Sachs Research ”
Ark Invest: “ Big Ideas 2022 ”

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The Impact Investor | ESG Investing Blog

Investing for financial return is only part of the equation.

How to Create an Investment Thesis [Step-By-Step Guide]

Updated on June 13, 2023

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One of the worst mistakes an investor can make is to sink their money into an investment without knowing why. While this may seem like the world’s most obvious mistake to avoid, it happens every day. Look no further than the stock market for plenty of examples of misguided optimism gone terribly wrong.

That’s where the idea of an investment thesis comes in. An investment thesis is a common tool used by venture capital investors and hedge funds as part of their investment strategy.

Most funds also use it on a regular basis to size up potential candidates during buy-side job interviews. But you don’t have to work at a venture capital fund or private equity firm to reap the benefits of creating an investment thesis of your own.

Table of Contents

What Is an Investment Thesis?

Materials needed to create a thesis for your investment strategy, a step-by-step guide to creating a solid investment thesis, step 1: start with the essentials, step 2: analyze the current market, step 3: analyze the company’s sector, step 4: analyze the company’s position within its sector, step 5: identify the catalyst, step 6: solidify your thesis with analysis, free tools to help strengthen your investment strategy.

An investment thesis is simply an argument for why you should make a specific investment. Whether it be a stock market investment or private equity, investment theses are all about creating a solid argument for why a certain acquisition is a good idea based on strategic planning and research.

While it takes a little more work upfront, a clear investment thesis can be a valuable tool for any investor. Not only does it ensure that you fully understand why you’re choosing to put your hard-earned money into certain stocks or other assets, but it can also help you develop a long-term plan.

Should an investment idea not go as planned, you can always go back to your investment thesis to see if it still holds the potential to work out. By considering all the information your thesis contains, you’ll have a much better idea of whether it’s best to cut your losses and sell, continue holding, or even add to your position.

An investment thesis includes everything you need to create a solid game plan, making it a foundational part of any stock pitch.

See Related : Best Socially Responsible Stocks To Invest In Today

One of the benefits of an investment thesis is that it can be as complex or as simple as you like. If you actually work at a venture capital firm , then you may want to develop a full-on venture capital investment thesis. But if you’re a retail investor just looking to solidify your investment strategy, then your thesis may be much more straightforward.

If you’re an individual investor, then all you really need to create an investment thesis is somewhere to write it out. Whether it be in a Google or Word doc or on a piece of paper, just make sure you have a place to record your thesis so that you can consult it down the line.

If you’re developing a venture capital investment thesis that you plan to present to an investment committee or potential employers, then there are plenty of great tools online that can help. Slideteam has thousands of templates that can help you create a killer investment thesis , as well as full-on stock pitch templates.

As mentioned earlier, an investment thesis holds the potential to help you plot out a strategy for pretty much any acquisition. But for the sake of simplicity, we’ll assume throughout the examples in the following steps that you’re an investor interested in going long on a stock that you plan to hold for at least a few months or years.

Venture capitalists looking to invest in companies or startups can also apply the same principles to other investment goals. Investors who are looking to short a certain stock should also be able to use these techniques to locate potential investments. The main difference, of course, is that you’ll be looking for bad news instead of good.

First things first. Before you get into doing the research that goes into an investment thesis or stock pitch, make sure you take the time to write out the basics. At the top of the page, include things like:

The name of the company and its ticker symbol
Today’s date
How many shares of the company you already own, if any
The current cost average for any shares you may already hold
Whether the stock pays dividends and, if so, how often. You may also want to include the current ex-dividend and dividend payment dates.
A brief summary of the company and what it does

See Related : How to Start Investing With Purpose

Now it’s time to take a look at the entire market and the direction it’s headed. Why? As Investors Business Daily points out,

“History shows 3 out of 4 stocks move in the same direction as the overall market, either up or down. So if you buy stocks when the market is trending higher, you have a 75% chance of being right. But if you buy when the market is trending lower, you have a 75% chance of being wrong.”

While the overall market direction is definitely an important factor to keep in mind, what you choose to do with this information will largely come down to your individual investing style. Investors Business Daily founder William O’Neil advised investors only to jump into the market when it was trending up.

Another approach, however, is known as contrarian investing, which revolves around going against market trends. Warren Buffett summed up the idea behind this strategy with his famous quote, “Be fearful when others are greedy, and greedy when others are fearful.” Or as Baron Rothschild more graphically put it, “Buy when there is blood in the streets, even if the blood is your own.”

Most investors who are looking for a faster return will likely be better off waiting to strike until the iron is hot. If you align more with the long-term contrarian philosophy, however, bleak macroeconomic outlooks may actually strike you as an ideal investment opportunity .

See Related: How to Invest in Private Equity: A Step-by-Step

Now that you’ve got a look at the overall market, it’s time to take a look at the sector your company fits into. The Global Industry Classification Standard (GICS) breaks down the entire market into 11 sectors. If you want to get even more specific, you can further break down companies into the GICS’s 24 industry groups, 69 industries, and 158 sub-industries.

Once you identify which group your company belongs to, you’ll then want to take a look at that sector’s performance. Fidelity provides a handy breakdown of the performance of various sectors over different time periods.

But why does it matter? Two reasons.

Identifying which sectors various companies belong to can help you ensure that your portfolio is properly diversified
The reason that sector ETFs tend to be so popular is that when a sector is trending, many of the stocks within that sector tend to move in unison. The reverse is also true. When a certain industry is lagging, the individual stock prices of the companies in that industry may be affected negatively. While this is not always the case, it’s a general rule of thumb to keep in mind.

The idea behind working sectors into your investment criteria is to give you an overview of what type of investment you’re about to make. If you’re a momentum trader, then you may want to shoot for companies within the strongest-performing sectors this year or even over the past few months.

If you’re a value investor, however, you may be more open to sectors that have historically experienced high growth, even if they are currently suffering due to the overall state of the economy. Some speculative investors may even be interested in an innovative industry with strong potential growth possibilities, even if its time has not yet come.

See Related : How to Invest in Community [Step-by-Step Guide]

If you want to up your odds of success even more, then you’ll want to compare the company you’re interested in against the performance of similar companies in the same industry.

These are the companies that tend to get the most attention from large, institutional investors who are in a position to significantly increase their market value. Institutional investors tend to have a huge amount of money in play and are far less likely to invest in a company without a proven track record.

When choosing an investment, they’ll almost always go with a global leader over a new business, regardless of its promise. However, they also consider intrinsic value, which considers how much a company’s stock is selling for now, as opposed to how much revenue the company stands to earn in the future. In other words, institutional investors are looking for companies that are stable enough to avoid surprises but that also stand to generate considerable capital in the future.

Why work this into your game plan? Because even if you don’t have millions of dollars to invest in a company, there may be hedge funds or venture capital firms out there that do. When these guys make an investment, it tends to be a big one that can actually move a company’s share price upward. Why not ride their coattails and enjoy a solid growth rate as they invest more money over time into proven winners?

That’s why it’s important to make sure that you see how a company stacks up against its closest competitors. If it’s an industry-leading business with a large market share, it’s likely to be a strong contender with solid fundamentals. If not, you may end up discovering competing companies that make sense to consider instead.

See Related : What is a Triple Bottom Line? Definition & Examples

At this point, hopefully, you’ve identified the best stock in the best sector based on your ideal investing style. Now it’s time to find out exactly why it deserves to become a part of your portfolio and for how long.

If a company has been experiencing impressive growth, then there’s bound to be a reason why.

Is the company experiencing a major influx of business because it’s currently a leader in the hottest sector of the moment? Or is it a “good house in a bad neighborhood” that’s moving independently of the other stocks in its industry?
How long has it been demonstrating growth?
What appears to be the catalyst behind its movement? Does the stock owe its growth to strong management, recent world events, the approval of a new drug, the introduction of a hot new product, etc?

One mistake that far too many beginning investors make is assuming that short-term growth alone always indicates the potential for long-term profit. Unfortunately, this is not always the case. By figuring out exactly why a stock is moving, you’ll be far better positioned to decide how long to hold it before you sell.

A strong catalyst can cause the price of a stock to skyrocket overnight, even if it’s laid dormant for years. Even things like social media hype and rumors can cause a stock’s price to shoot up over the course of a given day. But woe to the investor that assumes these profits will last. Many are often left holding the bag when the price increase turns out to be part of a “ pump and dump .”

While many day traders can make a nice profit by capitalizing on these situations, such trades are best avoided altogether if you plan to hold a stock long-term. That’s why it’s so important to understand whether a stock is “in play” for the day or whether its growth can be attributed to more permanent factors that support the potential for a high return over time.

See Related : How to Become an Impact Investor [Step-By-Step Guide]

If you’re planning on investing a significant amount of capital in any stock, then a little research may be able to save you from a lot of heartache. Keep in mind that the focus of an investment thesis is to formulate a reasoned argument about why adding an asset to your portfolio is a good idea.

While all investments come with some level of risk, research can be an excellent risk mitigation strategy. There’s nothing worse than watching an investment fail due to an obvious factor you could have spotted with closer analysis. Don’t let it happen to you!

Fundamental analysis can help you ensure that your potential investments have the underlying traits that winning stocks are made of. While there’s a bit of a learning curve involved when you’re first starting out, here are some of the things you’ll want to focus on:

EPS stands for “earnings per share.” It’s a common financial indicator that basically tells you how much a company makes each time it sells a share of its stock. In this regard, a higher EPS is a good thing, but it’s important to look for solid EPS growth over time. Ideally, you’ll want to see consistent growth in a company’s EPS over the past three or more quarters.

Sales and Margins

Investing is all about putting your cash into successful companies, which is why sales and margins are key components to finding worthy investments. Sales indicate how much a business has made from (you guessed it) sales. Sales margin, also known as gross profit margin, is the amount of revenue a company actually gets to keep after you factor in overhead and other production costs. Ideally, a good investment will exhibit strong, consistent sales growth in recent years.

Return On Equity (ROE)

ROE is one of the more commonly used valuation metrics and is calculated by dividing the company’s net income/shareholders’ equity. ROE is basically a measure of how efficiently a company is using the capital it generates from equity fundraising to increase its own value. The higher the ROE, the more likely it is that a company operates with a focus on using its cash flow to increase its profits.

See Related : How to Do a Stakeholder Impact Analysis?

While these are just a few examples of various analysis methods to work into your investment thesis, they can go a long way toward locating solid companies worth investing in. Interested in learning more about technical and fundamental analysis? There are now plenty of great sites that can help you master the secrets of the training world.

In our opinion, Tradimo is one of the most underrated, as it provides tons of free classes for investors of all levels. Udemy also has some great classes that can help you learn how to beef up your investment thesis with as much quality information as possible.

But keep in mind that these are only suggestions. The most important part of any personal investment thesis is that it makes sense to you and can serve as a valuable tool to help you along your investing journey.

Related Resources

Best Impact Investing Online Courses
Best Green Apps for a More Sustainable Life
Sustainable Investing vs Impact Investing: What’s the Difference?

Kyle Kroeger, esteemed Purdue University alum and accomplished finance professional, brings a decade of invaluable experience from diverse finance roles in both small and large firms. An astute investor himself, Kyle adeptly navigates the spheres of corporate and client-side finance, always guiding with a principal investor’s sharp acumen.

Hailing from a lineage of industrious Midwestern entrepreneurs and creatives, his business instincts are deeply ingrained. This background fuels his entrepreneurial spirit and underpins his commitment to responsible investment. As the Founder and Owner of The Impact Investor, Kyle fervently advocates for increased awareness of ethically invested funds, empowering individuals to make judicious investment decisions.

Striving to marry financial prudence with positive societal impact, Kyle imparts practical strategies for saving and investing, underlined by a robust ethos of conscientious capitalism. His ambition transcends personal gain, aiming instead to spark transformative global change through the power of responsible investment.

When not immersed in the world of finance, he’s continually captivated by the cultural richness of new cities, relishing the opportunity to learn from diverse societies. This passion for travel is eloquently documented on his site, ViaTravelers.com, where you can delve into his unique experiences via his author profile.

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Jun 24, 2020, vc lab: vc investment thesis template.

In order to build a strong venture capital firm as a first-time fund manager, you need to start with a strong Investment Thesis. Find our worksheet here.

What is the Investment Thesis for a venture capital firm?

An Investment Thesis is the strategy by which a venture capital fund makes money for the fund investors, called Limited Partners or LPs. It identifies the stage, geography and focus of investments, as well as the unique differentiation of the firm.

What are Limited Partners?

Limited Partners, or LPs, are investors in venture capital funds, and there are a number of common categories, including family offices, pension funds, endowments, sovereign wealth funds and even corporates. LPs often have allocations for different stages of venture capital as an asset class, and these allocations are provided by their internal or external investment strategy managers.

Why is the Investment Thesis important for a venture capital firm?

An Investment Thesis is used to attract Limited Partners, and it guides the activities of the firm. Most LPs have investment criteria for their venture capital allocations that they are looking to meet, and a compelling Thesis allows LPs to see if a fund meets their desired allocation criteria.

What are New Managers?

New Managers are a category of venture capitalists that are launching a new venture capital firm. Even experienced venture capitalists get categorized as a New Manager if they are launching a new firm. Many categories of LPs are restricted from investing into New Managers, including pension funds, endowments, sovereign wealth funds and even corporates. This is because New Managers do not have a track record and because the new firms run into common problems of any new business.

What is the most common Limited Partner for a New Manager?

Most New Managers raise capital from family offices, which are the investment operations of wealthy individuals and families. Small to mid-sized family offices are often led by a wealthy individual, such as an entrepreneur that has had a large exit, and these individuals make the decision to invest into a fund. Family offices often have an agenda and a focus that can align with a compelling Investment Thesis, allowing New Managers to more easily get meetings.

How do you write a compelling Investment Thesis?

There are multiple components to a compelling Investment Thesis that we have compiled into a simple to follow format. A good Thesis can often take months to develop, iterating on feedback from the market, advisors, and fund investors. In order to start this process, we have created a simple template for creating a venture capital Investment Thesis below.

“[Fund Name] is launching a [$x MM] [Stage] venture fund in [Country / City] to back [Geography] [Sector / Market Companies] [with Secret Sauce]”

Below you can see tips for each component in [brackets]:

[Fund Name] When getting started, we recommend using a last name or color, like ‘Ressi Ventures’ or ‘Orange Fund,’ since the Thesis will evolve many times over the first months. After you feel that you have a final Thesis, then choose a name that represents your fund.
[$x MM] This is the size of committed capital by LPs to the fund. You will be able to raise a fund that is 10 times the size of what you think you can easily close from contacts that you already have. So, if you think that you can easily raise $500,000 from friends, acquaintances and other contacts, then your first fund size maximum is $5 MM.
[Stage] Stage is usually based on fund size, and, for New Managers, the options are angel (<$5 MM), pre-seed ($5 MM to $15 MM), seed ($15 MM to $50 MM) and Series A (>$50 MM). It is easier to have a larger fund doing an earlier stage, such as a $100 MM angel fund, than it is to have a smaller amount of money for a later stage, such as a $10 MM Series A fund.
[Country / City] This is the city or country where the New Managers are living or plan to live while running the fund. Now, most funds have a life of at least 10 years, so make sure to pick a city or country where you and your fellow New Managers plan to be for some time. In addition, if you are living in a large country, then it is better to specify a city or region. “East Coast” is better than the United States.
[Geography] This is the region where the fund will invest in portfolio companies. If the Geography is not specified, then it is assumed that the funding will be local. This is particularly important for New Managers, who often try to be too broad and then do not appear credible. For example, it is unrealistic to assume that a New Manager with a small fund will do cross border deals that require complex legal management.
[Sector / Market Companies] This is the type of companies that the fund will focus on investing in, such as FinTech, digital health, SaaS or marketplaces. Ideally, when choosing a sector or market in a geography, the opportunity will be obvious to the right LPs, such as "East Coast Fintech companies” or “German SaaS companies.”
[with Secret Sauce] ’Secret Sauce’ is your insight into a sector or market opportunity based on your in-depth experience. For example, “West Coast heath startups based on my 15 years leading the largest health tech angel group in San Diego while practicing neurosurgery.” The secret sauce needs to show why you are uniquely qualified to create this fund, and, if the market opportunity is not obvious, it should also show why the market opportunity is important right now.

What is a sample Investment Thesis?

Using the above template, here are some clear and concise thesis examples:

“Purple Ventures is launching a $5 MM angel fund in Brussels to back European government technology startups that leverage the partner’s experience in various political and bureaucratic leadership roles across the EU.”
“Found Capital is a $15 MM Seed fund in Lagos to back African mobile payment and fintech companies sourced from the partners network built while working as startup ambassadors at Google, PayPal and Microsoft in Africa.”
“Sven Fund is a $100 MM Series A fund in Singapore to back blockchain startups in Asia that are building dynamic supply chain systems, which is a market segment where the partner had the largest recent exit in the region.”

How specific should your Investment Thesis be?

A compelling Investment Thesis is very specific about stage, geography and focus to align with the allocation requirements of Limited Partners. A common problem is that New Managers are often afraid to be specific, since they feel it will limit their ability to do hot deals. A Thesis states the intention of a firm to pursue certain kinds of investments, but often is not legally binding in the firm or in the fund agreements. So, an Investment Thesis has the effect of gravity. Venture capitalists often can do deals that are far away from the Thesis, but they have less attraction.

How do you refine your Investment Thesis?

You will be refining your Thesis heavily for the first few months when forming your fund. The measure of a great thesis is how easily it can attract meetings with LPs, but the first person that you need to satisfy with your thesis is yourself.

Here is an initial exercise to get started that should take about 30 minutes to an hour.

First, use the template above and try to write three versions of a potential venture fund thesis. As mentioned above, be as concise and specific as possible.
Next, read each of them aloud while recording a video of yourself. Speak conversationally (in the same way you might casually pitch the idea to someone in an elevator), and in one video "take".
Then, watch the videos and ask yourself if you would realistically invest in that thesis. How clear was the message? How confident was the delivery? What questions come to mind?
Finally, revise the thesis and video until you are satisfied with your work. Resist the urge to make the one-sentence thesis a one-page thesis. Remember: brevity is the key.

Download this VC Investment Thesis Worksheet

What are the next steps.

This is just one part of the first steps to starting a venture capital firm, which include:

Review Our VC Investment Thesis Template
Determining Your Venture Capital Fund Size
Selecting a Venture Fund Area of Focus
Building a Strong Value Proposition for a VC Firm

We will be adding separate guides for each of these sections shortly on our main How to Start a Venture Capital Firm Guide .

This content is provided by VC Lab, the YC for VC. Learn more about the industry-leading and free programs at: https://GoVCLab.com If you have questions about venture capital, ask the leading AI for VC, Decile Base. The Decile Base venture AI offers a fund lawyer, accountant, and tax specialist on demand. https://DecileHub.com/base VC Lab is a part of Decile Group. Decile Group is unlocking the potential of venture capital with a full-stack platform that empowers emerging managers to launch top-performing funds 3x faster through training, tools, and capital. https://DecileGroup.com

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Investment Thesis

The investment thesis is a crucial component of every stock presentation. So, what are the components and how does one create a strong investment thesis?

Investing without sound reason is perhaps the best way to characterize chaos in the venture capital market . That is why most venture capitalists and other investors adhere to an investment thesis when investing. This concept also aids venture capital firms in persuading limited partners that their capital is secure.

The investment thesis is a crucial component of every stock presentation. So, what are the components and how does one create a strong investment thesis? Let’s understand the importance of investment thesis in the article.

Making an investment takes time. Formulating an investment thesis is a crucial step that an investor should take before investing in an opportunity. A well-written investment thesis will explain in detail why a certain investment opportunity will likely yield a healthy profit .

What is Investment Thesis?

An investment thesis should essentially focus on the following points:

The reason behind your ownership of the firm .
The outcomes you anticipate.
The aspects of the company that do not appear favorably in the market.

According to many seasoned investors , it’s hard to find something more useful to keep investors focused and mentally honest than this simple practice. The key to effective investing is sticking to simple fundamentals and not getting caught up in the market’s big and little swings.

Example of Successful Investment Thesis

It is common practice for investment firms and portfolio managers to provide details on their investing thesis on their websites. Here are a few such instances.

Morgan Stanley

Among the most prestigious banking institutions in the world, Morgan Stanley (MS) ranks high. It provides wealth management, securities, investment banking, and investment management services. The business claims that its investing method consists of five stages: ideation , evaluation of quality , valuation, management of risk , and portfolio development .

As part of the quality evaluation process , the firm aims to address the following three issues while formulating its investment thesis:

How vulnerable is the business to revolutionary shifts, and is it a disruptor in its own right?
Does the firm show signs of solid financial health, such as low capital intensity, low leverage, high margins, and great cash conversion?
Is the investment thesis vulnerable to risks related to governance, accounting, or social or environmental externalities that the firm does not own?

Why is Investment Thesis important?

An investment thesis is a critical tool for investors that outlines the rationale and framework behind their investment decisions. It serves several important purposes, including:

Clarity in decision-making – An investment thesis clarifies the decision-making process by establishing a clear framework and criteria for making investment choices. For instance , an investor may have a clear investment thesis centered around renewable energy companies.
Minimizing risk – This includes a thorough risk assessment and mitigation strategy . Consider an investment thesis for a technology-focused portfolio. The thesis might identify regulatory changes as a potential risk.
Long-term perspective – An investment thesis encourages a long-term perspective by providing a strategic roadmap . An investor with a long-term outlook may have an investment thesis centered around demographic trends, such as the aging population. The investor can better withstand short-term market swings also.

Key Components of an Investment Thesis

What does a strong investment thesis sample contain? Let’s discuss the crucial components that make up the thesis.

Thesis Statement – This concise statement outlines the core investment idea, the rationale behind the investment, and the expected outcomes. Specify the market problem or opportunity the technology addresses , emphasizing the pain points and how the innovation uniquely solves them. Highlight the potential transformative impact on industries or user experiences.
Market Analysis – This is an in-depth examination of the target market, including size, growth potential, trends, and dynamics. Provide a breakdown of target customer segments , their specific needs, and how the technological solution meets them . Include data on market trends, adoption rates, and potential regulatory changes affecting the technology landscape.
Value Proposition – It is a clear articulation of the investment’s unique value. Describe user scenarios or case studies that illustrate how the technology creates value. Discuss user-centric design principles or usability features that enhance the overall user experience.
Competitive Advantage – This includes identifying and explaining the factors that set the investment apart from competitors. Conduct a detailed comparative analysis of competitors, emphasizing technical differentiators. Discuss the scalability of the technology and how it positions the investment for long-term success.
Financial Projections – This is a detailed forecast of the financial performance of the investment over a specific period. Break down financial projections into technical milestones, development costs, and key technical performance indicators. It could involve metrics like software development timelines or manufacturing efficiency improvements.
Risk Assessment – This is a comprehensive analysis of potential risks and challenges associated with the investment. Evaluate potential technical risks in-depth, including dependencies on specific technologies, potential bottlenecks in the development process, and cybersecurity concerns. Provide mitigation strategies for each identified risk.
Exit Strategy – This plan outlines how and when investors intend to exit the investment . Detail potential acquirers or partners, emphasizing their strategic interest in the technology. Discuss IP ( intellectual property ) strategies and how they contribute to the exit plan.
Management Team – This evaluates the skills, experience, and track record of the management team responsible for executing the business plan. Showcase specific technical accomplishments of the management team members. Highlight their roles in previous successful technology projects and their ability to lead technical teams effectively.
Social and Environmental Impact (if relevant) – This is a consideration of the investment’s impact on social and environmental factors. Provide a comprehensive assessment of the environmental and social implications of the technology . Discuss any relevant industry certifications or standards highlighting the technology’s positive impact.
Supporting Evidence – Data, research, and evidence that substantiate the claims made in the investment thesis. Include technical documentation, prototypes, beta testing results, and user feedback. Provide detailed information on the technology’s development roadmap , emphasizing key technical milestones and their corresponding timelines.

Benefits of Having an Investment Thesis

Investment thesis presentation helps businesses in a variety of ways. Here are the most important advantages of this statement.

Clarity and Focus – An investment thesis provides a clear and concise roadmap for investment decisions , helping investors stay focused on their strategic objectives and avoid distractions from short-term market fluctuations or emotional reactions.
Informed Decision-Making – Financial decisions with a clear thesis require a systematic framework, in-depth investigation, and established criteria. It guarantees decision-making based on a thorough comprehension of the investing environment.
Risk Mitigation – Through a comprehensive risk assessment in the investment thesis, investors can proactively identify and mitigate potential risks, minimizing the impact of unforeseen challenges.
Long-term Perspective – It encourages a long-term perspective, reducing the influence of short-term market fluctuations and promoting strategies aligned with broader, sustained success.
Consistency and Discipline – A well-defined investment thesis fosters consistency and discipline in investment, preventing impulsive decisions driven by market noise or emotions.
Measurable Objectives – An investment thesis often includes specific, measurable objectives. It allows investors to track progress, assess performance against predefined benchmarks, and make necessary data-driven adjustments.
Communication and Alignment – This acts as a communication tool that facilitates alignment among stakeholders, team members, or clients. It clearly articulates the investment strategy, objectives, and rationale, fostering a shared understanding among all involved parties.
Adaptability – While providing a structured framework, an investment thesis also allows for adaptability. Regular reviews and updates enable investors to incorporate new information, adjust strategies based on market developments, and continuously improve their approach over time.

How to create a strong Investment Thesis?

Creating a strong investment thesis involves a thoughtful and systematic process. Here are key steps to help you develop a robust investment thesis:

Research and analysis

The best way to determine how big of a fund you need is to look at other funds with similar objectives and performance metrics. Also, look into successful funds in various businesses and areas to get a feel for what works. A few places to find additional details about funds are trade journals, social media, and news announcements that funds release after they shut.

Identify and assess potential market, industry, and specific investment risks. It includes financial, operational, regulatory, and macroeconomic risks. Develop strategies to mitigate or manage these risks.

Tailoring to individual goals

After you’ve decided on a budget, you should specify the stage, sector, and geographic area where you intend to make investments. Demonstrating your investment concentration helps you focus on certain industries and phases, attracting limited partners who share your objectives. Additionally, founders who fulfill your criteria will find your fund more easily, while founders who don’t will be less likely to approach you for funding .

Flexibility and adaptability

Financial markets inherently involve uncertainty. Include flexibility in your thesis for future technological developments, shifting market situations, and unanticipated circumstances.

Create a routine to check in on your investment thesis and make any necessary updates. It allows you to incorporate fresh data, reevaluate the market, and fine-tune your approach.

FAQs on Investment Thesis

What should be included in an investment thesis.

While this document has no universally accepted format, many elements are consistent across industries. This typically comprises a proposal substantiated by research and analysis, including:

Said investment
What the investment aims to achieve
How likely it is to succeed, taking into account any relevant trends
The investment’s possible drawbacks and risks
Investment expenses, possible profits, and losses

What are the benefits of investment research?

Investment research provides critical insights into financial markets , helping investors make informed decisions. It facilitates risk assessment, identifies market trends, and supports selecting viable investment opportunities. By staying well-informed through research, investors can adapt to changing market conditions, minimize risks, and optimize their investment strategies for long-term success.

How does an investment thesis work?

This is a blueprint for making investment decisions . It involves crafting a clear statement of intent, analyzing the market, assessing risks, and defining a unique value proposition. It guides decision-making, promotes a long-term perspective, and ensures consistency. Essentially, it serves as a comprehensive framework informed approach to portfolio management .

Are there any challenges in making an investment thesis?

Yes , creating an investment thesis poses challenges. Research demands time and expertise, and market uncertainties can affect analyses. Balancing individual goals and risk tolerance requires careful consideration. Additionally, unforeseen events can impact investment strategies.

What are the objectives of an investment thesis in startups?

The objectives of an investment thesis in startups include defining the investor’s strategic focus, outlining criteria for startup selection, and articulating the expected value proposition. The thesis also sets measurable objectives, helps identify startups with high growth potential, and aligns the investment strategy with the investor’s broader portfolio objectives.

Discover the Power of Your Investment Thesis in Action!

By carefully considering and developing a well-researched investment thesis, you can enhance your investment decision-making abilities. It is advisable to draft one before making any investments, but you may also do so for current assets. The investing thesis can help determine if the opportunity supports your thesis and suggests you hold or purchase more or if it’s time for a sale. If you’re planning for your next fundraising round , prepare your research now and draft that perfect investment thesis!

If you’re looking for some amazing prospects to invest in, connect with Eqvista, our Eqvista raise program has listed some notable pre-seed and seed stage companies in the market. Eqvista helps you connect you with qualified founders. To learn more about our services, contact us now!

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If you want to start issuing and managing shares, Try out our Eqvista App , it is free and all online!

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Webstreet unveils a new investment thesis: micro private equity model.

Empowering Accredited Investors with Passive Investment Opportunities in Alternative Digital Assets

Strategic Buy-Grow-Sell Model Focused on Online Businesses

Diversification and Risk Mitigation through Sectoral and Geographic Spread

Minimal Capital Requirements When Compared To Private Equity

WILMINGTON, Del. , July 11, 2024 /PRNewswire/ -- WebStreet is currently raising funds from accredited investors for its eighth investment fund, having seen modest returns in its previous rounds.

Launched over three years ago as a spinoff of the highly successful and widely regarded #1 marketplace for online businesses, Empire Flippers, WebStreet — formerly known as Empire Flippers Capital—is reshaping the landscape of private equity by focusing on one forgotten alternative asset: online businesses. Leveraging a micro private equity model , WebStreet connects accredited investors with high-potential digital ventures, aiming to democratize access to its lucrative online business investments.

"WebStreet is fundamentally about offering a completely passive investment opportunity. Investors can choose funds based on the historical performance and specific strategies of portfolio managers." Kyle Kuderewski, Operations Manager at WebStreet

The Investment Thesis

WebStreet's investment thesis revolves around a structured buy-grow-sell model aimed at maximizing returns for its investors. The process begins with the acquisition of undervalued online businesses at attractive multiples. These online businesses—which could be e-commerce stores or SaaS companies—are selected for their robust operational histories and potential for substantial growth.

Once acquired, these businesses undergo strategic management and operational improvements to enhance their value. WebStreet meticulously selects its portfolio managers based on their extensive experience and specialization in specific niches.

Leveraging this expertise, the portfolio managers implement targeted growth initiatives, optimize processes, and expand market reach, all while maintaining a passive investment experience for its investors. This stage is critical in transforming these businesses into more profitable and scalable entities.

The final phase of the strategy involves the sale of these enhanced online businesses. They target exits within a two to four-year timeframe, aiming to sell at a premium to realize significant returns. According to them, this approach not only maximizes the potential for high returns but also provides investors with liquidity in a relatively short period.

"It's a win-win for everyone involved—investors and portfolio managers receive quarterly distributions and reports until the assets are sold, ensuring a transparent and profitable investment journey." Mohit Tater , WebStreet Portfolio manager

Risk Mitigation and Diversification

Each WebStreet fund typically includes 4 to 6 different businesses selected from various sectors, such as e-commerce, SaaS, and direct-to-consumer brands. This sectoral diversification spreads risk and allows the portfolio to benefit from multiple growth drivers. Additionally, the businesses are managed by different WebStreet portfolio managers, each bringing specialized expertise and regional insights, further enhancing the risk management framework.

Also, by investing in online businesses that operate in different regions, WebStreet minimizes the impact of localized economic downturns and regulatory changes. This geographic spread ensures that the performance of the overall portfolio is not overly dependent on any single market.

Operational risk is mitigated through rigorous due diligence and continuous performance monitoring. Before acquisition, WebStreet conducts extensive evaluations of potential investments, assessing financial health, operational efficiency, and market position. Once part of the portfolio, businesses are subject to regular performance reviews and strategic adjustments, ensuring they remain aligned with the fund's objectives.

"I cannot build a deep enough skill base across all the various monetization methods. Across ads, eCommerce, SaaS, Kindle publishing… I, as an individual, cannot keep up to speed at the depth that I would need to feel comfortable investing on my own. So, pooling with other investors was very attractive for me." Hannah Cui , 8-time WebStreet Investor, Former Tech Executive

Detailed quarterly reports are provided to investors, giving insights into the performance and strategic direction of each business, enabling investors to make informed decisions and understand the risk landscape.

Comparative Advantages Over Traditional Investments

Higher Return Potential

WebStreet targets digital businesses with substantial growth potential, such as e-commerce stores and SaaS companies. These sectors are known for their scalability and ability to generate robust cash flows. The buy-grow-sell strategy employed by WebStreet is designed to maximize these growth opportunities, often leading to higher returns compared to the steady but modest growth typically associated with stocks and bonds.

Cash Flow Generation

Unlike many traditional investments, online businesses can provide significant and consistent cash flows . E-commerce and SaaS companies, for example, often benefit from recurring revenue models and high-profit margins. This strong cash flow generation is a key attraction for investors seeking both income and capital appreciation, offering a more dynamic income stream compared to the fixed interest from bonds or the dividend yields from stocks.

"These are not hyped-up unicorn startups that could very easily go to the moon and also very easily crash and burn. These are under-the-radar, cash-flowing businesses. Online cash flowing businesses." Stefan von Imhof , WebStreet Investor, CEO and Co-Founder of Alts.co

Non-Correlation with Traditional Markets

Investments in online businesses tend to have a lower correlation with traditional financial markets. While stocks and bonds are heavily influenced by broader economic conditions and market volatility, digital businesses often operate independently of these factors. This non-correlation provides a valuable diversification tool, helping to stabilize overall portfolio performance and reduce vulnerability to market swings.

Scalability and Growth

Online businesses, particularly those in the e-commerce and SaaS sectors, are inherently scalable. They can expand rapidly without the physical constraints faced by traditional brick-and-mortar businesses. WebStreet capitalizes on this scalability through strategic growth initiatives, operational improvements, and market expansion efforts, offering accredited investors the potential for exponential growth within a relatively short timeframe.

Accessibility and Flexibility

WebStreet lowers the entry barriers for accredited investors by offering investment opportunities in high-growth digital sectors. This accessibility allows a broader range of investors to participate in private equity-like returns, traditionally reserved for institutional investors or high-net-worth individuals. Additionally, the platform's structured approach provides flexibility in capital deployment, allowing investors to tailor their portfolios to their risk tolerance and investment goals.

"There's trust in the system…… In the process of what I've seen in other areas that I'm counting on the team to follow through and do." Chuck Mohler , Principal at Eagle Corporate Advisors and 3-time WebStreet Investor

For more information about WebStreet, visit www.WebStreet.co .

View original content to download multimedia: https://www.prnewswire.com/news-releases/webstreet-unveils-a-new-investment-thesis-micro-private-equity-model-302189275.html

SOURCE WebStreet

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investment thesis

Hi I'm playing to write investment thesis for a growth capital fund. I want to understand the structure nuances needed in the thesis. Thnx in advance Cheers

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Writing a credible investment thesis
The investment thesis is no more or less than a definitive statement, based on a clear understanding of how money is made in your business, that outlines how adding this particular business to your portfolio will make your company more valuable. Many of the best acquirers write out their investment theses in black and white.
Investment Thesis: An Argument in Support of Investing Decisions
Investment Thesis: An investment thesis is the beliefs that investors decide to use when determining what investments to purchase or sell, when to take an action and why. An investment thesis ...
What Is an Investment Thesis?
Investing is a process. One important task an investor should perform before putting money into an opportunity is to develop an investment thesis. An investment thesis is a written analysis laying ...
Investment Thesis: Definition, Components and How to Prepare One
Building a strong investment thesis involves in-depth research, clear objectives, careful risk assessment, and alignment with your risk tolerance and time horizon. Implementing your thesis requires portfolio diversification, monitoring, adaptation to market changes, and tracking your progress. Regularly evaluate the success of your investment ...
How to Write an Investment Thesis
Step three: Portfolio construction. A thoughtful portfolio is critical to running a successful fund and shaping your overall investment thesis. Your strategy for portfolio construction signals to LPs how you plan to allocate their capital across investments. Your fund's investment portfolio is essentially the roadmap for the life of the fund.
Investment Thesis
An investment thesis is a contemplated contention for a specific investment strategy, backed up by research and analysis. In the financial world, an analyst might prepare a formal document framing an investment thesis for show to expected investors or an investment committee. An investment thesis can assist individual investors with assessing ...
Writing a Credible Investment Thesis
Writing a Credible Investment Thesis. 11/15/2004. Many companies are "terrifyingly unclear" to themselves and investors about why they are making an acquisition, according to the authors of a new book, Mastering the Merger. Support comes when you spell it out.
Investment Thesis Template
Investment Thesis Template. This template allows you to create your own investment thesis slide detailing your overall strategy. The template is plug-and-play, and you can enter your own text or numbers. The template also includes other slide pages for other elements of a financial model presentation. According to the WSO Dictionary,
How to Develop a Strong Investment Thesis in Early Stage
2. Research the current state of the market, including trends, challenges, and opportunities. This will help you identify potential investment opportunities and develop a more informed investment thesis. ‍. 3. Evaluate the potential investment opportunities in the market, including the founding team, product, and business model of the startups.
Investment Thesis: The Roadmap for Successful Investing
An investment thesis is a well-reasoned argument that serves as the foundation for making investment decisions. It is a written document that outlines an investor's goals, market analysis, risk tolerance, and the specific criteria they will use to evaluate potential investment opportunities.
Investment Thesis: What It Is, How To Write One & Examples
June 26th, 2024. 13 minutes read. An investment thesis formulates the characteristics and criteria that define a potentially profitable investment. It outlines the reasons behind the investment decision, including various criteria, financial outcomes, and strategies to manage risks. Essentially, it serves as a detailed plan for investors.
How to Create an Investment Thesis [Step-By-Step Guide]
Step 1: Start With the Essentials. First things first. Before you get into doing the research that goes into an investment thesis or stock pitch, make sure you take the time to write out the basics. At the top of the page, include things like: The name of the company and its ticker symbol. Today's date.
VC Lab: VC Investment Thesis Template
A Thesis states the intention of a firm to pursue certain kinds of investments, but often is not legally binding in the firm or in the fund agreements. So, an Investment Thesis has the effect of gravity. Venture capitalists often can do deals that are far away from the Thesis, but they have less attraction.
Investment Thesis
Investing without sound reason is perhaps the best way to characterize chaos in the venture capital market.That is why most venture capitalists and other investors adhere to an investment thesis when investing. This concept also aids venture capital firms in persuading limited partners that their capital is secure.. The investment thesis is a crucial component of every stock presentation.
What Is an 'Investment Thesis' and Why You Should Have One?
An investment thesis was the foundation behind every savvy investor's portfolio. By identifying inevitable demographic, technological, and cultural shifts and then finding companies to harness ...
WebStreet Unveils a New Investment Thesis: Micro Private Equity Model
WebStreet's investment thesis revolves around a structured buy-grow-sell model aimed at maximizing returns for its investors. The process begins with the acquisition of undervalued online ...
An Investment Thesis: The Key To Making More Money Long Term
Here are key characteristics of a good investment thesis: Clear and Concise: The thesis should be easily understandable and to the point. Supported by Research: Ground your thesis in thorough research, including fundamental analysis, technical analysis, and an understanding of relevant economic and market trends.
investment thesis
Deutsche to englisch deutsch awesome leverage Termin werden. Alle Begriffe. Switch to mobile view ... thesis - die Thesis: Last post 01 Jul 11, 21:33: Thesis, die 1.betonter Taktteil im altgriechischen Versfuß; Gegensatz Arsis (1a) abwärtsg ... Investment: Last post 11 Jul 05, 15:55:
Thesis Auf Deutsch
Thesis Auf Deutsch - Free download as PDF File (.pdf), Text File (.txt) or read online for free.
PDF LESSON 6: THE INVESTMENT THESIS
LESSON 6: THE INVESTMENT THESIS This lesson will teach you the importance of establishing a set of principles that justify why you continue to own or have decided to sell a particular company's stock. At the conclusion of this lesson, you should be able to: Recognize the importance of a creating an Investment Thesis before investing in a stock.
investment thesis : r/private_equity
investment thesis. Hi I'm playing to write investment thesis for a growth capital fund. I want to understand the structure nuances needed in the thesis. Thnx in advance Cheers. So, you want somebody to write you a long detailed comment telling you exactly what to do? You don't sound smart enough to do what you're shooting for, sorry.
Dissertations / Theses: 'Investment banking'
Video (online) Consult the top 50 dissertations / theses for your research on the topic 'Investment banking.'. Next to every source in the list of references, there is an 'Add to bibliography' button. Press on it, and we will generate automatically the bibliographic reference to the chosen work in the citation style you need: APA, MLA, Harvard ...

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Investment Thesis: What It Is, How To Write One & Examples

What is an Investment Thesis?

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Understanding the Investment Thesis

Navigate Investment Crowdfunding

How to write an Investment Thesis

Examples of an Investment Thesis

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