Venture capital firms often raise their first fund with a particular thesis in mind.

This thesis dictates the industries, stage, geography, etc that they invest in.

A fund’s investment thesis is different from an investor’s investment thesis.

An investor’s individual investment thesis dictates how the she decides where to place her bets. A fund’s investment thesis dictates what kinds of startups they invest in.

For example, when Hustle Fund raised Fund I, our fund’s thesis was:

• software-oriented startups
• at the pre-seed and seed stages
• based in North America or Southeast Asia

Another fund’s thesis might be:

• climate tech startups
• post-revenue, but pre-Series A
• based in Canada

You get the idea.

Here’s the thing about your fund’s investment thesis: you've sold your LPs on this vision, and they're counting on you to stick to the plan.

But that doesn’t mean that your thesis can’t ever evolve. It can. And for most funds, it should.

But how do you know when to make a change? What might that evolution look like? And what are the downsides?

We’re going to dive into all these questions in today’s edition of Small Bets.

Pivots aren’t just for startups

About one-third of Hustle Fund's portfolio companies go through substantial pivots.

This shouldn’t come as a surprise. Startups have to be adaptable in order to survive. They might start out with one assumption, but over time come to realize that something else is true.

That kind of adaptability is a good thing.

And guess what? The same is true for VC funds.

We've seen funds pivot from Web3 to AI, or from consumer apps to B2B SaaS. It's not just acceptable — it's a sign of a fund that's paying attention to the market.

Why a fund’s thesis might change

So, why would a VC fund decide to shift gears?

In a nutshell… to follow the talent.

A VC’s number one job is to support great teams. And great teams will lead investors to great opportunities.

If you're a generalist fund like Hustle Fund, your business is about backing the best founders, wherever they may lead.

Those founders will show you where the real opportunities lie — even if it's not where you initially thought they'd be.

Here’s how Hustle Fund has evolved

Let's look at Hustle Fund's own evolution. We’ve been in the game for nearly 8 years, and we’ve learned a thing or two.

Some things have stayed the same… like our focus on software-oriented founders, and our generalist approach.

But within that framework, we’ve made adjustments:

1. Check size: We’ve tweaked the balance between first and second checks based on portfolio data.
2. Sector: We didn't start with a background in digital health. But over time our investment team developed an interest and expertise in this industry.
3. Geography: We no longer focus exclusively on a particular region. We seek out great founders and growing markets, regardless of where they may be.

All the changes we’ve made over the years are based on data pulled from our own fund. Particularly from our earliest investments.

This is the benefit of time. And having a data-obsessed team.

The downside

Now let's talk about the risks.

Imagine this scenario: You tell your LPs you're all about Web3 in January. By June, you've pivoted to robotics. Come December, you’re laser-focused on AI.

Feeling dizzy yet? Your LPs certainly are.

If you jump around too much, and don’t have good rationale as to why you’re making these changes, then your LPs might start to question whether you have a long-term strategy.

So yes, change can be good… but it needs to be thoughtful and well-communicated.

So what’s the takeaway here?

Let’s recap real quick:

1. Change is normal (and often necessary) for a fund.
2. Follow the founders — they'll show you where opportunities are.
3. Use data to make decisions.
4. Communicate changes clearly to your LPs.
5. Maintain a consistent core while allowing for strategic shifts.

Remember, the goal isn't to pick a thesis and stick to it at all costs. It's to build a successful fund that supports great founders and delivers returns to your LPs.

Want some feedback on your fund’s thesis and strategy? Then join us at Camp Hustle next month.

Not only do we have a boatload of sessions designed specifically for fund managers, we’re also hosting a pitch deck clinic with a panel of LPs and 1-1 office hours with the Hustle Fund GPs.

You can get direct feedback on your deck, portfolio construction, positioning, or anything else related to building a fund.