There are many reasons people decide to launch venture funds, but there are very few valid ones to do so. The most important one should be: because you have an edge in a specific area or a particular insight or conviction. You should believe there is a massive market opportunity to capture, which is ideally not immediately evident to other market participants.
Recalling all of my best investments, this has always been the case. I was always potently obsessed with a particular area or technology, as it felt clear that it would be transformational for society and therefore lead to potential outstanding returns. It felt strange other people weren't as obsessed as me.
In fund I, we designed Unruly to be a search function for what is next, and we have executed on that exactly how I had imagined it. We have a portfolio that spans many different industries, technologies and geographies.
Our core belief is that while outperformance in venture is generated by backing the right founders, it’s much easier to find them when you’re in the right place at the right time, and have the opportunity to see almost everything happening. You want to be one of the few people looking in the areas where the most interesting founders are building.
Early alpha
The only reason it was easy for me as an absolute no-one to get into Stripe’s office and hang out with Patrick, John, Greg etc when they were 8 people, or introduce Plaid to a lot of people in the valley for their pre-seed round, was that there were very few other people excited about fintech APIs, while it was instead fairly clear to me it would yield massive companies. Being a nerd about fintech APIs was an actual competitive advantage.
The same played out investing in other areas early: getting introduced to Brian at Coinbase before YC, participating in ETH, 0x, and so on in 2014-16 and investing in climate full time in 2018. The only reason it was easy was that no one was around! And while everyone wanted to stay as far away as possible from it, I couldn't spend my time thinking about anything else.
So somewhat naturally, now at Unruly we obsess about hanging out where no one's around.
Thesis building
But it takes a lot of time to build a specific alpha (I estimate a couple of years on average). In my experience, alpha is built up by ingesting a lot of information, following your curiosity, talking to a lot of people, potentially writing, maybe investing a little bit.
One area we haven't seen many people think about (nor like or understand), but which we think is inevitable, is the decentralization of the real world, a trend we think will yield multiple generation-defining companies.
Building this thesis took years of observation, connecting the dots, reading, thinking, and a natural philosophical inclination to the idea.
We were primed, and now that the world is moving in that direction, it’s easier for us to recognize it. Not too many people believe in it, and Hacker News comments were borderline insults, so we think we're in a very good place.
Alpha decay
Going through that process a few times, I don’t think it’s possible for a single person to do that forever, and given that at Unruly we are obsessed with alpha decay, we spent a lot of time internally to understand how we could constantly have an early alpha as our original ones will start to inevitably decay. We might know nothing about a new technology, not be in the right social circles, not be young enough or generally not have the correct psychological inclination to be able to have a perfectly “prepared mind” for upcoming important ideas.
We’ve been talking about alpha decay internally for a while. It’s a very real concept, and to me is both very useful and very scary. On the one hand, I’ve benefited substantially from it in the past as it left wide open spaces for me to play in and succeed. But on the other end, it's an inevitable slow death that you can constantly see in front of you.
I might be more paranoid than most, but everyday I know my alpha decays a little bit more. I've been able to build new alphas over the years but if you mix age, and the rapid acceleration of technology, we can assume that the rate of alpha decay will probably be accelerating.
You don’t hear too many investors saying “we don’t know where the next billion dollar company will come from”. Most people will tell you that they know, have the right experience, right network and so on. And whether that's “sustainability”, “longevity”, “defense” or whatever topic made it easier to raise from LPs, it can probably be true. There are still going to be unicorns and decacorns being built in fintech, saas, marketplaces, climate, etc. but that does not mean that the alpha is there. Once everyone knows about it, and is comfortable investing there, competition increases, prices rise, and risk gets mispriced to the point that outperformance is very hard to achieve.
That’s not a situation I really like to be in, so while we fully believe we will be able to define a few more (we have a couple in the works on labor and sugar for example), given the long and very personal process we want to try and shortcut it by leveraging other people’s obsession and interests.
Breaking rules: pitch us your thesis
Today we want to break another rule: we want some help in building new alphas. To make sure we can scale Unruly’s ambition and impact, we are soliciting pitches, not for startups, but for investment theses, and for people that can deploy them.
The goal is to find people like myself 10 years ago, when I had a lot more time, neurons and ingenuity to dig deep on something that was deemed completely wild by most everyone else.
We want to hear about what you think are new areas, topics, geos, verticals, stages, technologies, macro trends, philosophies, concepts, etc. that are 1) intellectually fascinating, 2) only a few nerds are thinking about, 3) most people think are dumb, gross, crazy, etc. and 4) you think have the potential to yield large world-changing companies.
What are the smartest people thinking about? What are the very clear trends that are obvious to you but not others? Who are the people that are looking at the world with a new lens? Who can connect the dots on new technologies and where they could lead? Where are we most likely to find the next Elon Musk playing? What are the technologies that are enabling completely new sectors?
Answering the above questions is, to me, what VC really is. Think, and be prepared to get lucky. Doing the work to be in the right place at the right time.
That's why we think theses are nothing without people. Usually you can shout from the rooftops about what is the secret to riches, but very few people would care. A thesis needs a very curious and persistent person, comfortable with being labeled crazy for years (in which time they can see everything that's happening in a space).
So together with your thesis, we'd love to hear who you think are the top 3 people in the world in regard to that specific thesis (if you’re one of them, even better!).
Our vision is to have a few visiting folks at Unruly who will have complete freedom to deploy their thesis, while we provide them with substantial capital, a ready-to-go structure, branding, full support, guidance, training, salary, office and anything else needed to find, support, and invest in generational defining companies. This is not a scout play, and not a venture partner play. We're looking for people that want to dedicate their next chapter to obsessing about one currently obscure topic.
If this sounds intriguing to you, please share your thesis with us before October 31st here: https://forms.fillout.com/t/8RLh2TbJZQus. We'll try to review submission as fast as they come in.
FAQs
What type of thesis can I submit?
Go wild. While a new vertical, geo or technology is what most theses are about, we encourage you to submit any investment thesis with clear alpha. It could be a different fund model (YC, EF, etc. were alpha-full theses at the time), or a specific type of founder (teens, ex-ACME, heavy lifters, etc.), or even new type of companies (DAOs, Special Economic Zones, etc.). We are really looking to be surprised, we want to say “well that's nuts” and then go back to it the next day and ask ourselves “is it really though?”
What return expectations do you have?
Your thesis should have the potential to return 10-50x on an invested amount of $3-5M in ~10 years.
We are interested in learning about lower risk thesis that have high IRR but are not yet set up to help you with those. But you can still try to convince us!
How does this all work?
We are looking for a few people to help us deploy unruly investment thesis, as embedded as they want into the Unruly team. We provide full backed support, capital, marketing, deal execution, mentoring, and anything else that's necessary for the person to focus their energies on finding (or creating) gems in thesis.
This is not a search for analysts or associates. Ideally, this is a full-time position with full lead check writing responsibilities.
We're open to part time or other creative arrangements as well.
Why should I join you?
You should join us if you’re obsessed about a specific thesis and want to help the world realize it faster.
You also should join us if working at a large do-it-all fund, where you’ll be called in to diligence random deals where you won’t have a say is not particularly stimulating for you.
Here, you will have ~$3-5M at your disposal to lead deals, without having to think about anything else. You will also have time to substantially help out your portfolio companies so as to build an even better track record as an investor.
On the downside, you will probably make more money as an associate at a large fund.
Who should apply?
There is by definition no correct profile. You could be a student, entrepreneur, academic, operator or current VC. The only thing we need is a unique investment thesis and the right person to deploy it.
You should be ideally looking to jump full-time into your thesis, although we’re open to part-time ideas.
Why shouldn’t I raise my own fund for this?
Trust me, raising a fund sucks for a variety of reasons:
It takes a loooong time, during which you can’t really do much else
is massively distracting from the actual thesis, as you spend most time pitching LPs that probably won’t get it
2 years-min without salary
A million things to do = less time for founders
You won't be able to lead deals with a small fund 1
You will need min 20 cos in the fund, so less time per company to help them out
How many deals will I be able to lead?
4 to 6
What happens after 2 years?
You could start a company in-thesis with our backing
You could spin out and raise your own fund, where we’d help substantially
You could run the thesis again if it was too early or if alpha is still there and undiscovered
You could join one of the portfolio companies that are clearly breaking out
