How can you gain a deep understanding of an industry to find investment opportunities?

My personal take is to be cautious about investing in an industry or, more specifically, a problem that you/your team do not directly understand. This is also an opportunity for any VC/Angel Investor to build an Advisory Board or Venture Partner network to help them better understand opportunities. Any of these team members with expertise in different industries can help you source quality dealflow, assist in your due diligence, and even find strategic partners (or even customers!) if you decide to invest in that industry. Making the compensation performance-based can mitigate risk with Advisory Boards/Venture Partners, incentivizing them to continually provide value throughout the fund's lifetime, maximizing returns for all involved.

To me it’s about knowing the landscape, key players and drivers to better understand the market opportunity and growth potential. Having prior relevant experience as a team and a blend of complementary skills, can help you craft an investment thesis that is linked to your core capabilities and is able to back the rationale of why you are best suited to invest in a specific sector and focus area. It’s about being uniquely positioned to win in your chosen area of focus and being able to answer questions such as what differentiates you as a team? What unique strengths do you possess? What have you built in the past and how does that position you to build to last? There in lies the secret sauce to what can make you the dream team for the job.

To me, the best way to learn quickly and deeply about any subject is to talk to someone who is immersed in that world. No question is silly and they will often love to be able to share their learnings with you. It can challenge the subject matter expert to explain in simple terms what they know - which helps them improve too.

Establishing a clear scope is my compass in industry exploration. Identifying key segments and niches sharpens my focus amid industry complexities. Understanding drivers, challenges, and opportunities in each sub-sector informs a nuanced investment strategy. Defined criteria and metrics serve as benchmarks, aligning with my investment thesis. This deliberate narrowing of scope is a strategic lens, preventing overwhelm and guiding me to the most pertinent facets of the industry landscape.

Defining your scope would mean to define what ultimately is your focus. What do you want to focus on and where is it you're trying to spend most of your time ? Once you narrow down really what direction you want to go, it'll give a clear mission. A clear mission is key in the future when you get to raising capital or partnering with others in the finance space.

Databases, industry reports etc. are useful and somewhat obvious sources. Data sourced through human interaction with industry players throughout the supply value chain in the specific industry offer an invaluable resource which is sometimes overlooked.

We live in a rapidly changing world and evolving technological advancement, it is important to have reliable sources of information to use regularly to stay abreast of new developments. There is so much information on the internet and various social media platforms but it is key to identify reliable sources for research purposes relating to your areas of focus to grow your knowledge reservoir and improve your value add capability. Each opportunity is unique in the investment landscape and there is not one deal that is the same as the other, so being open minded, doing thorough research and using reliable sources of research information will keep you relevant and improve the quality of your investment decisions.

Research is my foundation in industry exploration. Starting with diverse sources—industry reports, news, podcasts—I gather a holistic overview. Tools like Crunchbase and PitchBook track key players and trends. Industry-specific databases provide specialized insights. This multi-faceted approach ensures a comprehensive understanding, guiding strategic decisions with a nuanced grasp of startups, competitors, customers, and investors in the chosen sector.

There a variety of sources that provide great info in the VC space, but the best has to be Pitchbook. They appear to have the most accurate and up to date information. Tech Crunch is also great as a news source, and other industry specific journals. But to me, researching the history of the industry and it's developments will be just as important - history tends to repeat itself.

In my opinion, there are a few ways to utilize research in order to become a field expert at something. 1) Read books - I can't stress this enough, learning from an author who's already in expert in a field will help tremendously. 2) Find credible sources - I have seen so many people follow advice or information from sources that aren't actual credible and may not know what they're talking about... Don't fall into this 3) Be specific with what you're researching, you cant research any and everything about a topic. Once you find your scope, vision and focus this will become easier.

Aim to go deep in a focus industry. This may entail developing relationships with industry participants, attending trade shows/conferences, monitoring global research on current developments etc. Founders can tell very quickly whether a VC has deep industry domain knowledge. That is not to say that a generalist can’t be a value add investor, however, industry depth can be a key differentiator when evaluating investors.

Agreed, there is always value in engaging people on the ground to gain from their expert advice, learned experiences and challenges, you can gain new insights and perspectives when interacting with experts in the field, asking follow up questions to deepen your understanding of the subject. Research platform cannot replace the power of human interaction and knowledge sharing that happens when information is shared, challenged, unpacked, and transferred through dialogue. Building strong networks and connecting at a personal level is still what makes us human and enhances our ability to collaborate and co-create better than an online research platform can.

There’s nothing quite like getting your hands dirty and figuring out how something works from the ground up. I spend most of my time reverse engineering and building complex systems, and a good way to start is simple diagnostics… 1. Who are the key actors? 2. What are their roles? 3. What do they impact and what impacts them? 4. On what time scales is the idea/investment viable? 5. Where are the risks? Figuring out new spaces is always an empathy exercise. To understand, we first need a frame of reference.

Beyond online research, engaging with industry experts is my invaluable compass. Conversations with founders, operators, and mentors provide nuanced insights and firsthand experiences. Seeking feedback, learning from their stories, and building relationships offer a depth of understanding unmatched by online sources. Attending industry events enhances this network, providing opportunities to connect with peers and gain valuable perspectives from those actively shaping the industry landscape. It's the human element that enriches my research, grounding insights in real-world experiences.

Again, the best way to get to know anything is to talk to an expert. They enjoy it as they get to explain what they do in simpler terms, and you get the benefit of a subject matter expert. Where possible, try to provide as much value as you can to the expert in exchange for their time.

Singing up for free trials, accounts on websites or other similar trials work well when researching an industry. Try to find pain points with products, note them and use them to ask pointed questions.

Gaining a profound industry understanding involves hands-on experimentation. Becoming a customer of startups or companies offers firsthand insights into products or services. Joining projects or hackathons facilitates problem-solving and solution creation within the industry. Courses, books, and videos provide the necessary skills and knowledge. Embracing experiential learning enriches my comprehension, allowing me to navigate the industry landscape with a practical and insightful perspective.

The best way to get experience doing anything, is literally doing it. Experiment with different ideas after your research and learn from it. Remember, there is no such thing as failure; it is just a learning experience.

It is important to write down your thesis and observations (even if you do not share publicly) to gut check and monitor your assumptions and viewpoints over time. The best VCs are constantly studying the markets they invest in to be able to identify industry trends before they become readily apparent...

One thing I've found useful for emerging industries was taking a short course or watching a YouTube video on that subject for example quantum computing. As a deep tech investor, it is important for me to differentiate one startup from another based on the underlying technology.

A few ideas to structure a deep dive on a topic: 1. Market Understanding: Gain insights through research reports, conferences, and expert engagements. 2. Market Overview and Thesis: Define, segment, and size the market; analyze trends, technology players, and red flags. 3. Define Dominant Logic: Build company and knowledge databases, reaching out to priority firms and experts. 4. Identify Adjacent Opportunities: Explore new customer segments and pinpoint potential disruptions and tech gaps.