Investment Thesis

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Hi everyone, thank you for joining us for our third newsletter.

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In this newsletter, we'll talk about investment thesis and why FOMO is very dangerous in angel

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investing.

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So, let's start with some definitions.

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What is an investment thesis?

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It's essentially an outline of your investment strategy.

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It should identify the sectors you're interested in, why you believe this sector will grow,

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and the risks involved.

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Based on your thesis, you will then evaluate startups and reach a level of conviction.

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And usually I would divide this into low conviction, medium conviction, and high conviction.

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So you may be asking, well, why do I need one?

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Can't I just invest alongside the best investors in my industry?

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You need a screening mechanism to filter out all your deal flow.

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There are hundreds of startups raising capital at any point, and it's impossible to do a

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deep dive in all of them.

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There are also several distractions.

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FOMO, I think, is the biggest distraction.

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While investing alongside great investors is a good signal, it should validate your investment

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thesis, not define or guide it.

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The bigger firms invest in hundreds of startups and they will throw capital at risky bets

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for which they will not reveal which bets are risky and which aren't.

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So following them blindly is, I think, a sure path to losing money.

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Okay, so how do I make an investment thesis?

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This is a much bigger topic and we'll do a webinar down the line.

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For now, I will talk about one aspect of the investment thesis.

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And this aspect can be called your catalyst or the tailwind behind your investment strategy.

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Tailwinds are responsible for most of our successes.

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In his book, Outliers, Malcolm Gladwell discusses how tailwinds have been in the past driving

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successes of major companies such as Apple, Google, et cetera.

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What are tailwinds?

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Well, there are external events such as COVID, invention of smartphones, fast internet connection,

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wars and regulatory changes.

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In your thesis, you should try and identify which tailwind you're banking on.

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Here are the two tailwinds that I'm banking on.

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Home-based care, I think, will be a substantial future of healthcare in the next five to 10

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years.

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Too much of healthcare is delivered in facilities and hospitals, acute care settings.

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These facilities are expensive to run and require a considerable workforce.

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With more people leaving healthcare, I think there will be a shortage of these facilities

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and most of the care will be delivered at home.

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Most people would like to be treated in the comfort of their homes anyways.

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Home-based care, acute care and chronic care solutions will continue to saturate the market

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and certain subsegments such as care of the elderly largely remains untapped.

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I think here there is a substantial potential for startups to come and take some market

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cap.

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The second place I think will grow quite a bit in the next five to 10 years is artificial

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intelligence machine learning to replace administrative clinical tasks.

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I know this has been touted for decades now, but I really do think we're about five years

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out from regulatory changes which will allow software to treat and diagnose.

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This may start with fairly algorithmic clinical decision trees for birth control refills and

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it will expand to more complex decision trees.

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The reason I think this will happen is because of the aforementioned worsening healthcare

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clinicians shortage.

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As more clinicians leave, it adds to the workload of those remaining and worsens burnout.

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The one thing I will say is any solution in this space which involves clinicians doing

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more work will not survive.

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We have two exciting updates this week.

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Please welcome Neil Patel.

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He's an experienced investor and has invested in about 45 startups.

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He's the current CEO of ZeoHealth and he will be joining us as an advisor.

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One of our portfolio companies, Vena Medical, has successfully treated 13 patients with

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their medical device.

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Congratulations to them.

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Their device is used in stroke treatment.

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Currently to treat strokes, we use fluoroscopy or x-ray vision to look at where the clot

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is and then we try and extract the clot through an extraction device.

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What Vena Medical has done is they have made a micro camera so we can directly visualize

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the clot and remove it.

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Their device has now successfully been used in 13 patients.

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Usually the industry standard for chances of removing the clot on first try is about

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34% and theirs is over 60%.

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They are currently looking for a project manager based in Kitchener, Ontario and some guidance

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on FDA regulatory strategy.

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Please reach out if you're interested.

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Well that's it for this week.

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Thanks everyone for joining us.

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I would love your feedback on how you're liking the newsletter so far, things you'd

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like me to change and any topics you'd like me to cover.

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I'll talk to everyone again next week.

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Bye.