At Version One, an investment thesis has always been more than just defining a market sector or company stage. It has been the North Star that guides and keeps us centered amidst all the noise in early-stage VC, of which there has been a lot over the past decade!

Our investment philosophy is so core to who we are as humans and as a firm that even if we didn’t have one officially written, we’d still have the same guiding framework and convictions. But distilling our beliefs into a thesis helps communicate who we are to the outside world. We also recognize that a thesis is not static – much like product lifecycles – and as such, serves as a great timeline of how we’re evolving. 

Our current investment thesis, “backing mission-driven founders at the earliest stages,” was introduced back in 2020. It perfectly encapsulates our focus on backing a certain type of deeply passionate entrepreneur… and backing them at such an early stage when few people might believe in them. Pre-seed, seed, first check, inception… that’s where we believe we can provide the most value. 

Those words still hold true today, but they don’t explicitly spell out something we are always looking for when evaluating an investment opportunity. And that’s timing. Investors always talk about “Why now”, and we do too (for example, see our blog post Why Now?). But the more interesting question for us is “Why not?”

Another way to ask it is “What’s possible?” We’re interested in those rare opportunities where a founder is creating a brand new category. These opportunities are fringy and emerging (some might call them crazy, weird, whacky or wild). There’s nothing obvious or inevitable about it. They’re building something the market hasn’t yet imagined and doesn’t fit neatly into an existing market category. But if they’re right, then the fringe picks up momentum and ultimately becomes a wave.

When you’re early into a large wave, there’s so much more design space for a startup and founding team. There are no natural competitors, at least early on, and you’ve got a chance to define and lead the category.

One of the easiest ways to assess market maturity is if there’s a branded category with widely accepted terminology. When AirBnB was first starting out, there was no “sharing economy.” Once a category is branded and VCs are lining up, it’s usually too late for an early-stage firm like V1 to invest.

Going forward, we’re evolving our thesis to be even more explicit about the why now and why not:

We back mission-driven founders who are early in new areas.

Looking back on our journey over the past 10+ years, we predicted a few waves right and invested early into them:

• Vertical SaaS in 2012-2014, e.g. Jobber
• Crypto in 2016-2020, e.g. Uniswap
• Climate in 2020-2021, e.g. Patch

These days, the areas on our radar are a combination of “why now” and “why not”. For instance: 

• AI – with a focus on AI-native products, e.g. Ada
• VR/AR – especially with the recent launch of Apple Vision Pro, e.g. Remio
• Crypto – yes, we’ve been investing in crypto since 2016, but it still feels early given that design space has recently opened with new L2 scaling, and the acceleration of mainstream use cases like payments or tokenization of real-world assets
• Climate/energy – we are looking outside of software and just invested in a materials company replacing lithium ion with sodium ion (as the world is moving towards electrification)
• Hardtech/biotech – we recently backed a company building the next Illumina for proteins

We don’t want to minimize how difficult (or nearly impossible) it is to create momentum, rather than ride it. Building a startup is hard enough as it is, but pioneering founders need to build on brand new technology, find new markets, and convince everyone of the market need. BUT this is exactly who we, as venture capitalists, want to back. We look forward to meeting more of these courageous and bold founders creating transformational change!