Investment thesis overview
Your fund’s investment thesis is the legally binding mandate defining exactly which types of deals the fund can back. This thesis is set out in your Limited Partnership Agreement (LPA) and ensures that the fund’s capital is deployed only in deals that match its stated focus.
Legally binding mandate
- In an extreme example, if your thesis says you’ll invest in companies founded by twins, then you cannot invest in companies founded by siblings who aren’t twins.
- You are obligated to present on-thesis opportunities to the fund first—you can’t bypass the fund and invest personally or through another vehicle if the deal meets the fund’s criteria.
Why does this matter?
- LP protection: Your LPs rely on the thesis when deciding to commit capital, so it must be followed precisely.
- Compliance & integrity: Sticking to your thesis maintains transparency and avoids potential conflicts of interest.
- Fund reputation: Deviating from the stated thesis can damage trust and potentially violate your fund’s legal agreements.
Key takeaway:
Your investment thesis isn’t just a pitch—it’s a binding contract that dictates what you can (and cannot) invest in. If a deal is on thesis, it must go through the fund. If it doesn’t match the thesis, the fund cannot invest. This ensures you uphold your commitments to LPs and operate within the bounds of your LPA.