Is thematic investing the future of venture capital?

Over the last five years, the venture capital ecosystem has seen a significant rise in theme focused investment funds.

SaaS funds, hardware funds and my latest guest’s focus, consumer funds have all proliferated. So here to discuss these shifts is Justin Caldbeck, the co-founder of¬†Binary Capital.

Value Add To Portfolio Companies

Thematic funds, in the majority of cases, have the ability to provide a much greater level of operational support, according to Caldbeck. As he suggests, “we have many companies at this stage, in this sector that the resources are very close to hand.”

The ability for Caldbeck to advise the Founder on building the onboarding process is optimized. Why?

Caldbeck is solely focused on seed stage consumer companies, he only works on this exact use case. His input is not only targeted but researched. He can draw from previously developed pattern recognition of what makes one company successful and the other not.

Brand Leads To Dealflow

Due to the increasingly crowded VC market, thematic investing is becoming more of a differentiator. Prospective founders witness your domain expertise¬†and gravitate to it, creating the potential for proprietary dealflow. As Caldbeck states, “We want to be the first place for consumer founders to go.”

Not only do these founders go to thematic funds but they choose them over other funds. Caldbeck stated that since his move from Lightspeed, he has found it ‘easier to win’. Presenting the case that not only does it get them through the door but also to the signed term sheet.

Ultimately, we will continue to see the proliferation of thematic investment funds in the coming years. However, the acknowledgment that such focus can lead to blind spots, in addition to specific verticals getting destroyed by macro environments (Cleantech) mean generalist VC funds will continue to survive and thrive.