DEAN’S BOOK w/ Prof. CONNIE GRIFFIN
How to Write a Thesis-driven Research Paper
What is a thesis-driven research paper? The formal thesis-driven research paper entails significant research and the use of sources located outside the course materials. Unlike a personal essay, which doesn’t require outside research because it details your feelings and opinions on a topic, a thesis-driven research paper requires you to search out the solution to a problem that you have proposed in the paper’s thesis statement and to present what you have learned through research in a well-written, coherent paper. Following are some rules of thumb to make this possible: • Choose a suitable design and hold on to it: Planning must be a deliberate prelude to writing. o Generate ideas to sketch a plan: Before beginning a first draft, spend some time generating ideas. Think about your subject while relaxing. Write down inspirations. Talk to others about what you plan to write. Collect information and experiment with ways of focusing and organizing it to best reach your readers. o Assess the situation: The key elements of the writing situation include your subject, the sources of information available to you, your purpose, your audience, and constraints such as length, document design, and deadlines. • Make the paragraph the unit of composition: o How to Write a Good Paragraph: • Topic Sentence: Generally, begin each paragraph either with a sentence that suggests the topic or with a sentence that helps the transition. An opening sentence should indicate by its subject the direction the paragraph is to take. As readers move into a paragraph, they need to know where they are – in relation to the whole paper – and what to expect in the sentences to come. • Develop the Main Point: Topic sentences are generalizations in need of support, so once you’ve written a topic sentence, ask yourself, “How do I know this is true?” Your answer will suggest how to develop the paragraph. • Use the active voice: The active voice is usually more direct and vigorous than the passive. For example: Why was the road crossed by the chicken? Compare to: Why did the chicken cross the road? Active voice is direct, bold, clear, and concise. Passive voice occurs when you make the object of an action into the subject of a sentence. For example: The lab assistant weighed the soil samples. Compare to: The soil samples were weighed by the lab assistant, OR, worse yet, The soil samples were weighed. o Occasionally, you should prefer passive voice over active: • Those writing in science and technology often prefer passive voice. This is because they are more interested in what happened, or what was observed, than in who did the observation. • Political writing sometimes prefers passive voice. In any case when the action is more important than the actor, passive voice is fine. • Lawyers sometimes prefer passive voice when, for example, defending a criminal defendant: The car was stolen, RATHER THAN Mr. Smith is charged with stealing the car or, worse yet, Mr. Smith stole the car. Lawyers avoid putting their clients’ names in the same sentence as the crime. • Put statements in positive form: Make definite assertions. Avoid tame, colorless, hesitating, noncommittal language. o He was not very often on time. o COMPARE TO: He usually arrived late. • Use definite, specific, concrete language: o Prefer the specific to the general, the definite to the vague, the concrete to the abstract. • The mayor spoke about the challenges of the future problems concerning the environment and world peace. • The mayor spoke about the challenges of the future problems of famine, pollution, dwindling resources, and arms control. • Omit needless words: Good writing is concise. A sentence should contain no unnecessary words, a paragraph no unnecessary sentence. This doesn’t mean that all sentences must be short or avoid all detail. Rather, every word should have a purpose. For example, the word “that.” Add the word that if there is any danger of misreading without it. Otherwise, omit it: The value of a principle is the number of things [that] it will explain. • Use plain English: Avoid legalese or other complex and difficult to understand wording when ordinary English words will work just as well. Use English; not Latin or Greek. Use short (not long) sentences. Keep it simple. Explain – don’t confuse. Long, complicated sentences do not make you appear smarter. Sometimes, in fact, they do just the opposite, demonstrating that you don’t know the topic well enough to paraphrase in simple, concise, understandable language. • Simplify: o Write sentences that are easy to understand and clear. o Don’t write a sentence that needs another sentence to explain it. o Unless a date or location is critical, leave it out. o Use very few, if any, footnotes – they distract. o Don’t overdo it: Sparingly use ALL CAPITALS, italics, bold, and underlining. Use either italics or underlines, but never use both. Don’t use several font types. 12 point Times New Roman font is easiest to read. o Watch the length of your paragraphs: A paragraph should seldom exceed 2/3 of a page. Shorter paragraphs are better. A long paragraph is like a speaker that drones on and on and on and on. . .
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Mazda: Journey Into The Electric Vehicle Era
- Mazda's financial development has been modest, driven by design philosophy, quality innovation, and technology, but its lack of scale and brand value limits market share gains against the leading players.
- Mazda's shift toward EVs has been slow and now will likely rely on Toyota for support to accomplish this successfully.
- Mazda's share price has underperformed due to mild financial performance, but it currently offers value with a high FCF yield.
Sue Thatcher/iStock Editorial via Getty Images
Our current investment thesis is:
- Mazda's financial development in the last decade has been modest, driven by its KODO design philosophy, quality innovation, and Skyactiv technology. Its lack of scale and brand value relative to the major automotive players has restricted its ability to expand beyond its current level.
- Mazda's development toward an EV fleet has been slow, now relying on Toyota to support the company's aggressive catch-up phase in the coming 5 years. We are concerned by Mazda's lost ground but believe broadly that the partnership with Toyota should protect the company.
- Although we believe the coming 5 years will be tough, Mazda is currently operating with an FCF yield of 14% and a deep discount to its historical average and peer group, implying value.
Mazda Motor ( OTCPK:MZDAY ) Corporation is a Japanese automaker known for producing a range of vehicles, including cars and SUVs. The company emphasizes innovation and driving dynamics in its products.
Mazda's share price performance has been underwhelming, losing value since 2010. This is a reflection of its mild financial performance during this period, struggling in the face of high competition.
Mazda Financials (Capital IQ)
Presented above is Mazda's financial performance in the last decade.
Revenue & Commercial Factors
Mazda's revenue has grown at a modest 5% during the last 10 years, with broadly consistent growth, although noting 2 periods (excl. the pandemic) of negative growth.
Mazda has a reputation for emphasizing design, engineering, and driving dynamics in its vehicles. The company strives to provide vehicles that offer an enjoyable driving experience and stand out in terms of aesthetics. The company operates in the affordable to mid-range segment, similar to many of its Japanese peers.
The company prides itself on its unique approach to engineering and design, referred to as KODO, which is described as the " depiction of potential energy in stationary forms " The inspiration for this was the stance of an animal waiting to pounce. This design approach has won several awards and is distinctive within the industry, allowing Mazda to differentiate itself. We believe this has been a key contributor to growth in the early part of the decade (in particular), allowing for brand development in Western nations as consumers seek Japanese manufacturing with a hint of fun.
Mazda has developed its proprietary Skyactiv Technology, which focuses on improving fuel efficiency, engine performance, and overall vehicle dynamics. This technology platform is aimed at enhancing the driving experience while also addressing environmental concerns. Reviews of Skyactiv have generally been positive, with good reliability and an enjoyable driving experience as key observations.
Both KODO and Skyactiv are supported by the wider "Zoom-Zoom" marketing, emphasizing driving pleasure, responsiveness, and a connection between the driver and the vehicle. We believe Mazda has done a fantastic job of gaining market share globally through effective marketing, underpinned by deep expertise.
Mazda's vehicle lineup includes a mix of sedans, SUVs, crossovers, and sporty models. This diversity allows the company to target different market segments and cater to varying consumer preferences. This is critical to generating economies of scale and brand development within this highly competitive industry.
Mazda operates in various global markets, including North America (36% of FY22 revenue), Europe (14%), Japan (15%), China (8%), and other markets. This global footprint has helped the brand develop, reaching a wide customer base and reducing concertation to specific markets.
Mazda has shown a willingness to work with other automakers to achieve joint improvements, similar to other partnerships agreed upon by competitors (Renault ( OTCPK:RNSDF )/Nissan ( OTCPK:NSANY )/Mitsubishi ( OTCPK:MMTOF ) being the most famous of which). Most recently, Mazda partnered with Toyota ( TM ), to collaborate on technology development, manufacturing efficiencies, and shared platforms to expand the former's footprint into the US. Toyota has taken a 5% stake in Mazda to cement this marriage.
The shift toward electric vehicles has been a gradual one for Mazda, with the business having been broadly focused on expanding its ICE-powered product range. Similar to its Japanese peers, the company has been less aggressive than the Europeans.
This said, Management has committed over $10bn to investment in EVs, with a number of models expected in the lead-up to 2030. The issue is that this is a technological race, not one of purely utilizing existing competencies. Consumers care about range, function, performance, etc., all of which rely on battery and powertrain technology. This means the business is likely to lean heavily on Toyota for further technology (which ironically has faced criticism for neglecting EV investment).
We do not think Mazda is in trouble yet but it is concerning that further progress has not been made.
We believe Mazda's key competitive advantages are:
- Brand Perception. Mazda's unique approach to design and driving dynamics has allowed the business to perform well following its divorce from Ford.
- Market Trends. Consumer preferences have shifted toward SUVs and crossovers, impacting sales of traditional sedans. Mazda's ability to adapt to this has been extremely impressive, with a range of SUVs in varying sizes and price brackets. These are generally well-reviewed.
- Expertise and reach. Mazda has developed a strong brand globally, through innovation and operational efficiency.
- Toyota. Having one of the largest automakers in the world as a partner and shareholder is a major advantage for Mazda. The success of its innovation will be somewhat limited because of this, knowing Toyota is there to support it.
The automotive sector has reached a point of saturation, with slower growth in demand for new vehicles and a relatively fixed hierarchy of brands. Improvements and mistakes will only partially impact Mazda's position, so long as it is broadly moving in line with the industry as a whole.
Mazda faces competition from other affordable/mid-market automakers such as VW ( OTCPK:VWAGY ), GM ( GM ), Ford ( F ), Toyota ( TM ), Honda ( HMC ), Subaru ( OTCPK:FUJHF ), and Stellantis ( STLA ), among others.
Economic & External Consideration
Current macro conditions are posing challenges for the automotive sector (and the wider global economy as a whole), mainly due to high inflation and elevated interest rates, which are leading to decreased consumer spending, particularly on significant commitments. Consequently, the ability to finance a new purchase, or willingness to, is reduced.
In its most recent quarter, Mazda posted a +32% increase in volume relative to the prior year, driven in large part by North America and Europe. Further, this quarter is broadly in line with the prior quarter (302k v. 322k), implying robust demand. LTM revenue growth of +12% reflects the impact on Mazda's topline.
The industry's resilience in terms of demand is a consequence of the lingering impact of the pandemic. Following an extended period of supply constraints owing to the semiconductor industry, consumer demand continues to unwind as availability improves. Further, we believe this is evidence of the general economic resilience in major economies, as evidenced by the lack of a recession despite the economic indicators. Finally, positive pricing action has been taken following the supply issues.
Mazda operates with slim margins, with an EBITDA-M of 7% and a NIM of 4%. This is a reflection of the company's aggressive pricing strategy and size, reducing its ability to achieve substantial economies of scale in line with the majors.
Margins are ticking up in the LTM period but this will likely slow, restricting the company's ability to move beyond an EBITDA-M of 7-8%, as economic conditions weigh on demand. Inventory turnover is not clearly suggestive of a slowdown but remains below its pre-pandemic level, restricting cash flows partially.
Balance sheet & Cash Flows
Although Mazda has a mild FCF margin, the business is positioned well to allocate capital to investors. It is investing consistently in R&D/Capex at a reasonable level while having a net cash position. Even as spending increases as part of the EV transition, the lack of material debt servicing means healthy excess FCF will remain. Despite this, returns have been below the company's potential, as Management has conservatively deleveraged and allowed cash to accumulate. This is seen among many Japanese companies and contributes to reduced ROE.
Automotive industry (Seeking Alpha)
Presented above is a comparison of Mazda's growth and profitability to the average of its industry, as defined by Seeking Alpha (16 companies).
Mazda underperforms its peer group, which primarily includes the largest traditional automakers, as well as several of the new EV players.
Mazda's growth has materially trailed in the industry in recent years, primarily due to the ability of the majors to price aggressively on the back of supply constraints. As the demand for Mazda cars is less high, it has not been afforded a proportionate effect.
Further, its margins are also lacking, although appreciating that at an FCF level, this gap materially shrinks. This is a reflection of both its competitive position and scale.
Valuation (Capital IQ)
Mazda is currently trading at 3.5x LTM EBITDA and 2.7x NTM EBITDA. This is a discount to its historical average.
A discount to its historical average is likely warranted, given the mild revenue growth, lack of margin improvement, and lack of EV development sufficient to safeguard its future. The latter point is our largest concern, as its slim margins need to be offset by growth at the higher end of LSDs.
Further, a discount to its peer group is equally warranted, reflecting its subpar financial performance and weaker brand in key automotive industries. Given the degree of discount, the relative view is not a reasonable metric for assessing fair value.
Based on this, Mazda looks undervalued, primarily due to the size of the discount relative to its historical average, which is inherently conservative. The company is trading at an over 100% discount to its peers on an EBITDA basis and over 50% on an FCF basis, underpinning this view. This represents an FCF yield of 14% (although appreciating that investors are not necessarily seeing this in the form of excess distributions). Following the recent share price appreciation, we would conservatively suggest an additional 20-25% upside, allowing for a (potentially conservative) 25-30% discount to account for medium-term risks associated with the EV transition.
Mazda's approach to the automotive industry is respectable, with a highly regarded design philosophy and strong marketing to sell price-conscious consumers on the enjoyment of its cars. We suspect the company continues to perform in line with historically achieved in the years to come, continuing to lag behind its much larger peers.
The key consideration is whether the company is sufficiently progressing toward the EV future. We do not believe so. This will act as a drag on the company's share price and financial performance until the likely outcome is known.
However, with an FCF yield of 14% and support from Toyota, we believe the risk-to-reward profile is currently attractive.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
This article was written by
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
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Avalon blog, predicting the future through thesis-driven investing.
Note: The full article on this topic first appeared on VentureBeat. You can read it here .
At Avalon Ventures, we’re committed to our three-pronged investment strategy , which has led to repeated success year after year. While some may define this success as prescience , our approach is actually much more sophisticated and interesting than looking into a crystal ball. What it all boils down to is pattern recognition.
We are able to observe emerging trends in the technology and life sciences markets in which we invest by seeing hundreds of businesses every quarter. We are able to narrow down these trends into patterns that turn into investing theses. These theses guide our investment decision processes, allowing us to determine which companies will be successful and which will not.
Based on experience, these are the three reasons thesis-driven investing helps predict the future of a successful investment:
- We know which companies will be successful even before they do
Once we develop a thesis about a particular market, we look for companies whose unique problem-solving strategies align with our underlying assumptions about the direction of a given market. Many times we end up finding those companies before they even come to us.
Take Skycatch as a good example here. My friends and fellow investors knew that the UAV (Unmanned Aerial Vehicles) space was on my radar. After they told me about Skycatch, I called founder Christian Sanz and we quickly realized that we were a mutual fit. His positioning and beliefs on drones as a data business, combined with the drone’s autonomy, aligns with our thesis about the space and growth of real-time imagine beyond human capabilities.
- We know what makes for a successful partnership
People matter. That is one of the most steadfast investment rules across all types of investments, public or private. When you invest long-term in a company, you’ll be sharing part of your life with them, which is why it’s very important to us to find a founder who shares the same underlying assumptions about a market. Many times it can be like finding an old friend. Sharing these assumptions aligns confidence in our partnership and becomes a powerful ally when times get tough (because they will). This also provides a place for common ground and understanding. Because of our different roles, investors and founders can find themselves at odds if they don’t share the same beliefs about the company’s purpose and future.
Thesis-driven investing allows for a successful partnership that endures throughout the company’s entire evolution.
- We can successfully move very fast
The fact of the matter is that your idea is not nearly as important as your ability to execute. When you have the right talent, tools and resources in place, you can move with incredible speed using your roadmap to navigate through difficulties ahead.
Having a common ground among investors and founders creates room for a fast pace of execution.
Why thesis-driven investing enables fast execution:
- You can confidently let the founder own decision making
- You can advise at strategic points and not at every opportunity
- When problems arise, we can tackle it from a common place
By following this successful strategy year over year, we have enjoyed backing many incredible founders and ideas with successful results. We’re committed to our approach of thesis-driven investing and are always to looking for key patterns and identifying exciting waves of innovation that are large and timely.
This entry was posted in Early Stage Investing and tagged in Investing , Partnership , Patterns , Thesis , Thesis-Driven Investing .
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What Is an Investment Thesis?
- Understanding the Thesis
- 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.
- 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 ( 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 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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Jonathan Templin speaks about adaptive assessment.
Does your VC have an investment thesis or a hypothesis?
- How to find a job as a scout for a VC firm
- What are the ‘jobs to be done’ of an investment manager?
Venture capitalists love to talk investment theses: on Twitter, Medium, Clubhouse, at conferences. And yet, when you take a closer look, theses are often meaningless and/or misleading.
OpenVC is a new, open-source initiative to collect and analyze all publicly available VC theses to help founders more efficiently find the right investors — and vice-versa. For the first time, we are sharing here our initial conclusions. We hope you’ll upload your own thesis to benchmark yourself. We’ve identified six common patterns of how VCs articulate their theses and some best practices in doing so.
Our analysis is based on two complementary datasets:
- 125 theses so far submitted by investors into the OpenVC database.
- 36 theses pulled directly from U.S. VC websites by David Teten and Sam Sabin , co-founder of Hireblue .
Our four primary conclusions:
- Public theses are often inconsistent with how firms actually deploy capital.
- VC theses are often so vague that they’re meaningless.
- We found seven categories of VC theses, plus an eighth: the non-thesis.
- Investment theses are just hypotheses; the portfolio shows how accurate the hypothesis was.
For the sake of simplicity, we will consider “investment thesis” and “investment criteria” as equivalent terms moving forward, although we argue that the thesis leads to the investment criteria. We summarize how they interrelate in the table below.
1. Public theses are often inconsistent with how firms actually deploy capital
A typical VC thesis: “We invest in tech startups in Europe at an early stage.” However, our experience shows that in many cases “Europe” means a handful of countries, for instance, France, U.K. and Germany; and “tech” means B2B SaaS/fintech or consumer apps.
Thirty-four VC firms in OpenVC call themselves “early stage.” Yet 30% of those don’t actually invest in pre-revenue startups. The phrase is quite ambiguous; we suggest quantifying check size so that your investment preference is clearer.
Almost every VC says that they invest in the “best” founders. However, according to PitchBook Data, since the beginning of 2016, companies with women founders have received only 4.4% of venture capital deals. Those companies have garnered only about 2% of all capital invested. This is despite the fact that the data show you’re better off investing in women .
This lack of transparency results in confused founders who chase the wrong investors. In turn, investors are overwhelmed with poorly qualified opportunities.
2. VC theses are often so vague that they’re meaningless
Christoph Janz from Point Nine Capital wrote on Twitter:
The modal VC thesis is: “We invest in great teams addressing large markets with disruptive solutions.” Who invests in lousy teams addressing tiny markets with outdated solutions? Theses also tend to use the same words across many firms, e.g., “daring” and “bold.”
In particular, in our second dataset, we found a disproportionate number of theses focused on “technical” companies (vaguely defined) and focused on companies attacking “problems of the future rather than the present,” in various permutations of that language.
Why are the investment criteria so imprecise on the VC websites? We have three theories, in descending order of importance:
- Option value. Investors don’t want to be too restrictive and miss out on a deal. However, we’d argue that for most smaller managers who are not brand names, it’s better to be highly identified in your niche than being a generalist. Most limited partners we speak with agree.
- A desire to look “sexy” and politically correct as opposed to being honest. This is probably a major reason. For example, saying publicly, “We invest mostly in white/Asian men who went to Stanford like us” accurately describes numerous VCs, but doesn’t sound very politically correct.
- VCs are afraid to give out their secret sauce. We think this doesn’t make much sense; you can share your criteria without telling the whole logic behind them. Many top-tier VCs share detailed public theses.
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Bill Gates Says ‘Brute Force’ Climate Policies Won’t Work
Speaking at a live event at The Times Center in New York, the billionaire philanthropist argued for a pragmatic, technology-driven approach to global warming.
Bill Gates Champions Innovation as Way to Combat Climate Change
“are we the science people or are we the idiots” asked bill gates, during a discussion about his pragmatic strategy to fighting climate change..
“If you try to do climate things brute force, you’ll sometimes get people say, ‘Hey, I like climate, I’m for climate, but I don’t want to bear that cost and reduce my standard of living.’ The political realities are such that without innovation, it’s unlikely, particularly in middle-income countries, that the brute force approach will be successful. I’m the person who’s doing the most on climate in terms of the innovation and how we can square multiple goals. I don’t use some of the less proven approaches.” Moderator: “Such as.” “I don’t plant trees. “There’s a lot of people who are very enamored with trees. We’ve got trees on this stage. Some people would even say that if you just planted enough trees, it could take care of the climate issue altogether.” “And that’s complete nonsense.” “OK.” “I mean, are we the science people or are we the idiots? Which one do we want to be?”
By Remy Tumin
- Sept. 21, 2023
Bill Gates, the multibillionaire founder of Microsoft, argued for a pragmatic, technology-driven approach to fighting climate change on Thursday.
“If you try to do climate brute force, you will get people who say, ‘I like climate but I don’t want to bear that cost and reduce my standard of living,’” Mr. Gates said at the Climate Forward event hosted by The New York Times. “Without innovation, it’s unlikely, particularly in middle-income countries, that the brute force approach will be successful.”
Mr. Gates also said winning more bipartisan support was needed in order for policy to actually stick. “Republicans for climate change action are gold, you know,” he said. “That’s got to be a number that somehow we manage to increase over time.”
“You can’t have a climate policy that when one party is in charge goes full speed ahead and stops cold,” he added. “These are 30-year investments in steel factories, new ways of making meat.”
Mr. Gates, who in recent weeks has espoused an everything-will-be-fine approach to the climate crisis, was asked whether he could reconcile that stance with the reality of extreme weather around the globe.
“I’m the person who is doing the most on climate in terms of the innovation and how we can square multiple goals,” said Mr. Gates, a co-founder of the Bill and Melinda Gates Foundation, a major donor to health- and climate-related causes. “There’s very limited money for causes to reduce inequity in the world. And no temperate country is going to become uninhabitable.”
Instead, he said, he is taking a more pragmatic approach and drawing a line at untested remedies like planting a trillion trees .
“Are we the science people or are we the idiots?” he said. “Which one do we want to be?”
Remy Tumin is a reporter for The Times covering breaking news and other topics. More about Remy Tumin
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Teaching Text Rhetorically
Integrating Reading and Writing Instruction by John R. Edlund
Thesis-Driven Versus Inquiry-Driven Assignments
Does the strong emphasis on the thesis/support model in our schools have something to do with the polarization of our society?
In my previous post I described a “Survey of Opinion” assignment in which I asked students to find three op-eds taking different positions on an issue they were interested in and analyze the way each writer talked about the issue, how they framed it, what terms they used, etc. They found the articles, but instead of doing the rhetorical analysis, many of them crafted a thesis statement on the issue and used the articles to support their own positions, essentially writing their own op-eds. They were quite surprised when I told them they had not done the assignment.
In response I wrote the post “ Why Do Rhetorical Analysis? ” in which I argued that a rhetorician must cultivate a “moment of neutrality” and step back from the ideological fray in order to objectively analyze the discourse.
Later in the course I assigned another inquiry-driven project that was modeled on investigative journalism, inspired by Marilyn Cooper’s article “How Bruno Latour Teaches Writing” (185-201) in the collection Thinking with Bruno Latour in Rhetoric and Composition edited by Paul Lynch and Nathaniel Rivers. Bruno Latour is a sociologist whose main contribution is something called Actor-Network Theory or ANT, which treats both humans and nonhumans (machines, animals, texts, and hybrids, among others) as potential actors or “actants” in a network.
Basic concepts from Bruno Latour’s Actor-Network Theory (ANT)
- None of us acts alone. Everything we do is part of an Actor-Network.
- Actor-Networks are made up of both human and non-human actants, such as animals and computers. From this perspective, we might see the novel corona virus as an actant.
- An Actor-Network is made up of intermediaries and mediators. An act flows through an intermediary without being changed. However, the input and output of a mediator is not the same, so the act is transformed to an extent.
- Actor-Networks are constantly being formed and unformed.
- We study an Actor-Network by describing it, not interpreting or explaining it.
I also told my students that in this assignment, “You don’t start with a thesis and look for ways to support it. That is actually not a legitimate way to proceed with research anyway. That is cherry picking items that support the thesis and ignoring conflicting information. Instead, you might start with a research question, such as ‘How did this happen?’ or ‘How did this get here?’”
A Model Text
As a model, I gave my students an article from the New Yorker (“Donald Trump’s Worst Deal” by Adam Davidson) about a Trump Tower in Azerbaijan, a 5-star luxury hotel which has been completed but never opened, so inconveniently located that local taxi drivers can see it, but don’t know how to get to it. How in the world did this hotel get there? The writer describes the scene of the hotel, then proceeds to trace the network of connections that caused it to be built, including politicians, financiers, investors, contractors, lawyers, oligarchs, and powerful families in Azerbaijan, Iran, and of course the Trump Organization. The writer has no explicit thesis for all of these connections, but part of the network extends to the Iranian Revolutionary Guard, and the most charitable conclusion that a reader can draw is that the Trump Organization is none too careful about whom it will deal with.
To help my students engage with the lengthy text, I divided it into sections and annotated it. I also gave them a handout with just the annotations. I am sure that some of them only read the handout.
The Resulting Papers
I got some good papers from this. One student was investigating Planned Parenthood and found that the founder, Margret Sanger, had connections to the eugenics movement that also inspired Adolph Hitler. Another discussed a bridge over the Grand Canyon and looked at the plans and actions of a Native American tribe, environmentalists, politicians, investors, and the tourist industry, all pulling the project in different directions. Another investigated Mt. Rushmore, and found that not only had the land been stolen from the Lakota, but the sculptor had connections to the KKK and had also been involved in a project, never completed, to make a similar monument to Confederate leaders. These projects followed the dictates of the assignment. No thesis, trace a network of connections, let the reader draw the conclusions.
However, many of the papers took the standard thesis/support approach. They thought they knew that a “research paper” was a paper in which you stated your thesis and found facts to back it up, while mostly ignoring contrary facts and views. They fired up their “research paper generation process” and largely ignored the particulars of the assignment. A middle group did some network tracing, but lapsed into editorializing at various points. I guess we could say that their “moment of neutrality” was brief and unstable.
Of course, this kind of writing is never entirely objective. When the author of “Trump’s Worst Deal” began his investigation, he undoubtedly thought he would find corruption. But going into the investigation with an open mind, following the connections where they lead, and letting the reader draw the conclusions is ultimately more persuasive than the standard thesis-driven op-ed. And both the writer and the reader learn so much more.
I might be stretching things a bit, but I think that the strong emphasis on the thesis/support model in our schools may have something to do with the polarization our society experiences today. The “Survey of Opinion” assignment has behind it the question “What do people think and how do they talk about it?” The network tracing assignment asks “Who are the actors, what are the facts, and where do they lead?” The thesis/support model, at least in its most simplistic form, is about “This is what I think and this is why I’m right.”
Perhaps we should diversify our assignment game a bit.
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