Craft Your Investment Thesis & Build a Purposeful Portfolio

Collab Article written by: Dr. Silvia Mah, Founder of Stella Angels and Stella Foundation, Fund I Manager of the San Diego Angel Conference, Member of the Investment Committee at Next Wave Impact Fund, Director of Innovation at Biola University & Associate Professor at Crowell School of Business at Biola University, and author of The Startup Investor Mindset, and Ana Bermudez, Founder of TAGit, former Board Member of the Notre Dame Alumni Association, and founding Chair of the Alumni Program for the Stanford Graduate School of Business, Latino Business Action Network’s Business Scaling Program.

As an investor, your unique experience and professional expertise give you a valuable perspective on business opportunities where you can create “value & joy” or drive “profits & joy”—what I like to call a "return on investment" and a "return on impact." If you're just starting out as an angel investor, I encourage you to attend startup events, pitch competitions, and accelerator programs, and connect with organizations like SVC. By observing as many companies and deals as possible without rushing to invest, you can better understand the current opportunities in today’s market and economic climate. Investing takes time—from sourcing and evaluating deals to performing due diligence and providing post-investment support—so having a broad, informed view is essential for making impactful, informed decisions.

Formulating Your Investment Thesis

Developing a strong investment thesis is essential for making mindful investments in companies where you can actively drive growth through your network, capital, and expertise. This approach increases your chances of success. Even if you're new to an industry, immersing yourself—by evaluating companies, engaging with entrepreneurs, and learning from experienced & seasoned investors—helps you build expertise. Over time, this positions you as a leader in that space, giving you valuable insights into the industry's key growth drivers and enabling you to invest in early-stage companies with high potential.

I encourage all investors, whether angel investors or venture capitalists, to take the time to clearly define their investment thesis. For VCs, in particular, a well-developed thesis is crucial when building a fund that attracts LPs who trust your expertise and ability to generate returns. While many angel investors may overlook this step, those who invest the effort become more efficient decision-makers, more impactful advisors, and stronger leaders in their respective industries.

Excerpt from the “The Startup Investor Mindset”:

“What is an investment thesis? A roadmap for investing. GRAVITY. It guides the investor towards investments that fit their financial objectives. An investment thesis is a crucial guide for investors to maintain discipline and focus on startups that align with their investment objectives. Without an investment thesis, investors may struggle to stay on track, risk wasting time sourcing and evaluating misaligned startup companies, and end up engaging in unproductive discussions with unsuitable individuals. An investment thesis serves as a guiding compass not only for investors but also helps entrepreneurs navigate their way to investors for guidance, advice, and funding. It also provides stakeholders in the startup ecosystem with insights into the investors' guiding principles, enabling others to join them along the transformative journey.”

To aid in crafting a compelling investment thesis, most investors employ a standard formula that defines their thesis quickly and efficiently. The typical formula for an investment thesis is as follows:?

“I invest in [typical founder profile]?

with a typical investment of [typical check size]?

at the [typical stage of company] stage?

in [geography]?

to fund startups in [sector/market]?

with [Secret Sauce].”

Investors can add further insight as necessary, like:

• “I provide [assets you can bring to the company] to all portfolio companies because I am [your background/interest] to [Secret Sauce].
• I like to [how do you interact with companies/founders], I [prefer/not prefer] a board seed, and request [typical asks of founders, like information rights, etc.]
• I look for liquidity in less than [typical horizon of investment periods].

To enhance knowledge sharing regarding the distinctions among investment theses of individual angels, angel groups, and venture funds, exemplifying the interdependencies and interconnectedness of the startup community, here are three illustrations.?

1_ As an angel investor who has backed more than 140 companies, my personal investment thesis states:

?“I invest in women-led or BIPOC-led startups in the seed round, typically $25,000 each deal. I am industry agnostic but prefer tech-enabled solutions. I focus on looking for difficult problems that I believe can be solved with the right team; I am founder-first. I can either lead a round if it is in my wheelhouse of expertise or follow on. I like to take an active role in advising the founder(s), prefer a board seat, but not necessary, and request information rights. I look for a liquidity event in 3-5 years and 5-7 years for life science.” (BIPOC: Black, Indigenous, People of Color)

2_ As the founder and leader of Stella Angels, an angel group comprising over 45 investors, our investment thesis revolves around:

“Stella Angels is a predominantly women angel network whose passion is to invest in women entrepreneurs. Stella Angels invests in diverse women-led startups in the pre-seed and seed round, typically either as a collective SPV (Special Purpose Vehicle) with a combined minimum check size of $50K or individually ($5K to $100K). The group is industry agnostic, requests information rights, and conducts due diligence as a group or organized by leadership from Stella Foundation.”

3_ The investment thesis of Stella Impact Capital, the fund for which I am a General Partner, reads like this:

“Stella Impact Capital is a $50MM seed stage venture fund in the United States to back diverse women-led, deep tech, impact-driven companies led by a team managing 150+ investments, 6 exits, and 1 IPO.”

Core Values are at the CORE

When startup investors take the time to define their own core values, it allows for more intentional and targeted investments that not only align with their personal beliefs but also have the potential to generate better returns. By investing in companies that resonate with their values, investors can bring more than just capital to the table—they can offer deeper insights, passion, and genuine support, which in turn enhances the likelihood of long-term success for both parties.

Why are values CORE to your thesis and thus, the build of a purposeful portfolio?

Investors should think about these elements when defining their values:

• Commitment: Dedication to ethical principles, guiding the deeper WHY of startup investing for the long haul, and supporting the creation of long-term goals for the startup and the overall portfolio of the investor.
• Ownership: Taking responsibility for actions and outcomes as an active investor in a startup that always needs further support, advisory, introductions, and strategy.?
• Respect: Valuing diversity, people, and their ideas.
• Excellence: Striving for the highest standards in all endeavors.

As an example, here are my values that I invest from on a daily basis:

• impact
• integrity
• legacy
• family first
• faith
• loyalty
• gratitude
• service
• love

Purpose-driven investing allows you to concentrate on industries and entrepreneurs that reflect your passions, which not only increases your emotional and intellectual investment in the company but also provides a competitive advantage. Investors who deeply understand the nuances of their chosen industry, paired with a clear set of values, can spot trends early, assess risks more accurately, and contribute meaningfully to a startup's growth.

Sourcing good deals is divine

Sourcing great deals is an art. I dedicate myself to and am fully immersed in building the broadest possible funnel by connecting with as many entrepreneurs as I can to uncover the best investment opportunities. I work to identify the most promising ventures in my professional roles as the partner for the micro VC fund, Ad Astra Ventures—which I co-founded with my Venture Partners, Allison Long Pettine and Vidya Dinamani—and our sister fund, Crescent Ridge VC, in partnership with Maria Gonzalez Blanch, as well as Stella Angels, the angel investor group I founded and have led for over 11 years. As co-fund manager for the past five years and Fund I Manager of the San Diego Angel Conference, our goal is to attract over 150 applications annually. This allows us to invest in the most innovative companies across the nation, while identifying exceptional founders who thrive in the San Diego ecosystem. For my personal investment portfolio, I focus on pre-seed and seed-stage startups with exceptional founder-market fit in thriving industries. Currently, my portfolio includes 160+ companies and investments in over 15 emerging fund managers. I essentially source very personally and intentionally for impact-driven VCs and angel groups/networks who are in search of GREAT startups.?

This commitment extends beyond the VC and angel groups I'm directly involved with. My broader & wider network of investors is always hunting for exceptional deals. Through sourcing, evaluating, and advising at the earliest stages, I actively seek resilient founders ready to make a significant impact in their industries through groundbreaking startups building significant solutions for world-defining problems. I've often been criticized for not sticking to a specific "lane," but my lane is more like an active image of a crisscrossed jungle gym or, in professional specificity, a dynamic, interconnected ecosystem of entrepreneurial and investor communities that I love supporting. I take pride in being an ecosystem connector, finding hubs and spokes of startup influencers, extracting the diamonds in the rough in many startup networks and supporting investors in their journey towards a thriving portfolio.?

For that reason, investors can source incredible deals from ecosystem connectors like me. We do this through events like the Women’s Venture Summit, where investors can meet the entrepreneurs we’ve sourced and selected for pitch competitions. Founders also benefit by connecting with investors whose interests align with their business vision. Our mission is to match great investors with great entrepreneurs, and the foundation of this work is TRUST.

Take Ana Bermudez, Founder & CEO of TAGit, for example. We first met 11 years ago at the inaugural Women’s Venture Summit in San Diego. From the start, I was inspired by Ana’s determination, resilience, and vision as a Latina founder in tech. Her drive to create an impact in the entertainment industry by connecting shoppers with brands featured on TV was impressive. Over the years, Ana demonstrated remarkable networking skills, following up with investors and building strong relationships, which ultimately led to securing new investments.

As a Latina founder in technology, Ana’s approach to sourcing and selecting the right investors is driven by networking, relationship-building, and aligning with the values and strategic direction of TAGit. We’ve stayed connected over the years, regularly meeting at the Women’s Venture Summit. Early on, Ana’s ability to follow up and build strong relationships after each event resulted in securing new investors, demonstrating her remarkable networking skills. The strongest investor relationships are based on a mutual fit—where investors not only see financial potential but are genuinely excited to have TAGit in their portfolio because it aligns with their investment thesis.

It’s crucial to find investors who actively seek out companies like TAGit, whether their focus is tech innovation, consumer products, women or diverse founders. Investors who truly understand your industry and share your vision, offer more than just capital—they become strategic partners, providing mentorship, connections, and guidance to help scale your business. The right investors don’t just believe in TAGit’s potential—they resonate with its purpose and are eager to support your journey. When you find investors who want you in their portfolio, they’re more likely to be committed long-term and provide the necessary support for sustainable growth.

Core Values & Crafting a Thesis Keeps Investors Focused on Purposeful Portfolios

Crafting a clear and focused investment thesis is the foundation for building a purposeful and impactful portfolio. By defining your core beliefs, industry passions, and long-term goals, you can make smarter investment decisions that align with your values and expertise. This intentional approach not only enhances your ability to identify high-potential startups but also positions you as a thoughtful leader and advisor within your chosen industry. A well-crafted thesis drives both meaningful returns and positive change, allowing you to support the next generation of innovative entrepreneurs while making a lasting impact in the ecosystem.

Events like the Women’s Venture Summit, allow for investors to meet and greet with entrepreneurs who align with their investment thesis in a dynamic and intimate environment to find the right match and dive into their questions with clarity and transparency.?

To learn more about finding the right investors for startups & finding investors who align with your investment thesis, attend Women’s Venture Summit on Sept. 25-27, 2024, and get Dr. Silvia Mah’s book, “The Startup Investor Mindset”, connect with Ana Bermudez at the Women’s Venture Summit, @AnaBermudez06 or follow us all on LinkedIn.

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