The meeting runs for ninety minutes. The founder is credible, the market is large, the team has relevant experience. The two GPs leave separately and agree within the hour: this one is interesting. A partner meeting is scheduled.
What neither says aloud is the question that would stop the process: does this company fit our thesis?
The fund’s thesis, as written in the pitch deck sent to LPs eight months earlier, states that it backs B2B software companies in the DACH region at pre-seed and seed stage, with a preference for founders with enterprise experience. The company under consideration is B2C, operates in the UK, and is pre-revenue. It has no enterprise element whatsoever. It is also genuinely interesting: strong founder, defensible niche, and a market that the GPs find compelling.
The fund passes a month later. The stated reason is market size. The real reason was never stated, because to state it would require the partners to acknowledge that the thesis did not actually prohibit the deal. The words in the LP deck were not criteria. They were preferences. The fund had a Sprawling Thesis: broad enough to accommodate almost any deal that felt good, precise enough to seem focused in a fundraising conversation.
This is where the Sprawling Thesis reveals itself. Not in the pitch. In the IC.
How the Sprawling Thesis Forms, What It Costs, and How to Fix It
How it forms: the LP dynamic that rewards breadth
The incentive that produces the Sprawling Thesis is not intellectual laziness. It is rational response to LP conversations during fundraising.
When a first-time fund manager sits across from a potential LP, the LP’s questions are driven by two concerns: whether the manager can source deals in the stated category, and whether there are enough deals in that category to deploy the fund. Both concerns push toward breadth. A manager who says they invest in B2B SaaS in the DACH region at pre-seed will face the question: is that market large enough? A manager who adds “and adjacent enterprise software categories across the EU” will face fewer objections in that conversation. The addition costs nothing during fundraising. It costs considerably during deployment.
The secondary dynamic is false confidence in flexibility. First-time managers often add qualifiers to their thesis (stage, geography, sector adjacencies) because they are genuinely uncertain about where their deal flow will come from. The thesis broadens as the manager hedges against the possibility that the primary category will not produce enough deals. What looks like prudent risk management in the fundraising document looks like structural drift in the portfolio.
The result, documented repeatedly in conversations across the EU investor network, is a Fund I thesis that answers the LP’s question and avoids the IC’s question. The LP asks: what do you invest in? The thesis answers that. The IC asks: what do you not invest in? The thesis is silent.
What it costs operationally
A Sprawling Thesis has three downstream consequences, each of which compounds over the life of the fund.
The first is IC paralysis. When deal pressure mounts and a company arrives that is adjacent to the stated focus, the fund has no legitimate mechanism to decline it. The IC discussion becomes a debate about whether the deal is “interesting enough,” which is not a thesis question. It is a quality question. Quality questions are appropriate for the final stage of evaluation; they should not be doing the work of thesis filter. Funds that lack a precise decision thesis frequently spend three to four weeks evaluating companies they would have declined in the first meeting under a stricter mandate. That time is not recoverable.
The second is inconsistent scoring. When two or three deals are evaluated simultaneously and the thesis does not produce a clear ranking, the IC defaults to subjective weighting. One partner prioritises market size; another prioritises founder; a third is drawn to a specific technology area. The discussion becomes a negotiation between preferences rather than an application of criteria. This is what produces the Comfort-Optimised IC described in this series: the process optimises for agreement rather than accuracy. The Sprawling Thesis is frequently the upstream cause.
The third is portfolio drift. Over two to three years, a fund with imprecise decision criteria accumulates a portfolio that does not reflect a coherent strategy. When Fund II fundraising begins, the LP cannot look at the portfolio and infer the decision logic that produced it. The fund’s fifteen investments span three geographies, two stages, and four sectors. The LP asks what connects them. The answer is quality, which is not a thesis. It is a curation claim, and it requires a track record to support it. The first-time fund manager does not yet have that track record.
The structural difference between a pitch thesis and a decision thesis
These are not the same document. They serve different functions and are evaluated against different criteria.
A pitch thesis is designed to answer the LP’s question and survive LP due diligence. It needs to be legible, distinctive, and large enough to support a fund of the target size. It does not need to be operationally precise, because LPs are not in IC meetings. It needs to be compelling enough to generate conviction.
A decision thesis is designed to be applied in real time, under deal pressure, to a specific company. It needs to produce a clear and defensible answer to the question: does this company qualify? Specifically, it must be able to generate a clear no with a stated reason for companies that are interesting but do not fit.
The test for whether a thesis criterion is a decision criterion or a preference is simple: can you name three deals you would have declined using this criterion? If not, the criterion is not doing operational work. It is decorative.
A criterion such as “we invest in B2B SaaS companies” fails this test. Almost every deal a seed fund sees can be framed as having a B2B SaaS element if the evaluator is motivated to find one. A criterion such as “we invest in B2B SaaS companies where the primary buyer is a department head or above in a company of 200 or more employees, and where the sales cycle is expected to exceed 60 days” is operational. It would decline a consumer application of the same technology. It would decline a PLG product with a self-serve motion. It would decline a horizontal tool aimed at SMEs. You can name three deals it would decline without thinking hard. That is the test.
The thesis stress-test table
Before the next IC, every thesis criterion should be subjected to this four-question test:
| Criterion | Can you name three companies it would decline? | Does it exclude adjacent deals that feel good? | Would a new partner understand it without explanation? | Is it operational? |
| “B2B SaaS in DACH” | Possibly (depends on how DACH is enforced) | Probably not | Yes | Partially |
| “B2B SaaS in DACH, enterprise buyer, 200+ employees” | Yes | Yes | Yes | Yes |
| “Founder with domain experience” | No | No | No | No |
| “Founder with 5+ years in the primary buyer’s function” | Yes | Yes | Yes | Yes |
| “Large market opportunity” | No | No | No | No |
| “Market where CAC can be recovered within 18 months” | Yes | Yes | Yes | Yes |
Any criterion that cannot pass this test is not a decision criterion. It is a signal preference that will produce inconsistent outcomes depending on who is in the room and how much deal pressure exists that week.
The Implication: What a Sprawling Thesis Costs at Fund II
The consequences of a Sprawling Thesis are not fully visible during Fund I. They arrive when Fund II fundraising begins.
The LP evaluating a Fund II track record is performing a specific analysis: does this portfolio reflect a repeatable decision process, or does it reflect opportunistic deal selection? A portfolio of fifteen companies in three geographies across two stages does not tell a legible story. The manager will explain that each deal was high quality. That may be true. But quality is not a process, and LPs backing Fund II are backing a process.
The funds that find Fund II fundraising materially easier than Fund I are, almost without exception, the funds that can look at their Fund I portfolio and tell a coherent story about why each company is in it. That story requires a decision thesis, not a pitch thesis. They are not the same thing.
The thesis audit question to answer before the next IC: for each criterion in your current thesis, write down the last company you declined using that criterion specifically. If you cannot, the criterion has not done any work. Sharpen it until it can.