Thesis Development and associated market work and target landscape analysis studies allow investors (pre-Commercial Due Diligence) to develop a fact-based and experience-informed view) to develop a fact-based and experience-informed view of the investment potential for a given target landscape (typically, either a sector, sub-sector, or even business model). Matters Graph supports investors through rigorous insight gathering and earnest and accurate interpretation and analysis to reach clear, evidence-based conclusions on market attractiveness.
Thesis development can be done in two styles at Matters Graph:
- More typical is a tighter hypothesis-driven approach that applies existing investment mandates and strategies as a lens on new markets to identify commonalities and “tightness of fit” to the desired strategy through rigorous testing combined with creative value-gen thinking to capture not just “what is” but “what could be” through business transformation, maximizing actionability and creating opportunity;
- Matters Graph also works in a more open-ended approach where, with investor direction on a given space, we explore together the available business models, investment strategies, case studies on wins, and more. In this mode, the goal is to identify the universe of strategies available for an investor in that space.
In all cases, Matters Graph’s goal is to unearth and examine where the best opportunities lie within the market, provide instruction on what it will take to open new value-creation opportunities, and ensure that supporting analyses have sufficient strength and integrity to drive conviction (speed and decisiveness) on pursuing (or declining) opportunities in the space.
Investors know that big opportunities emerge when unconventional views are considered, but processes led by bankers are unfortunately designed by intent to shut down original thinking—and to force-feed investors with a predetermined outcome motivated by predetermined themes. Investment bankers, like all auction experts, know that if bidders are all holding the same ideas, the seller can most easily get the maximum price in the shortest amount of time, regardless of the merit of those ideas. Our goal with our clients is to examine independently, explore and develop ideas that are sound and enable our clients to see what others are not even looking at.
Creating conviction in a space often means developing unique-to-the-case frameworks that measure and weigh the factors that matter for a given thesis. These frameworks help your team coalesce around clear conclusions. Matters Graph supports the development of these frameworks through our long experience serving a wide variety of investors across many strategies and industries; and we support the population/accurate production of these tools through proprietary, primary research that delivers data and insight only available to our clients.
Our Thesis Development and Market Study engagements typically cover both market fundamentals and specific value generation strategies, such as:
Market definition, market sizing, and growth rate assessments
- How is the market conventionally defined?
- How large is the market?
- Total market versus addressable versus penetrated (e.g., the “vended” vs. “potential” markets)?
- How strong is demand and what are the drivers?
- How is market share distributed?
- How fast is the market growing?
- What is driving growth? And what is inhibiting growth?
- What is the nature of any cyclicality?
- Where are we in the cycle?
- How strong is the profit pool in the sector relative to its value chain and adjacencies? Where and why is it strong (and how sustainable is it)?
Essential customer behavior
- What do barriers to adoption and barriers to switching look like, and how hard are they to overcome?
- What influences choice? How do customers get information?
- How do customers buy? What are the drivers of choice, and how do they rank? And, how are those drivers changing? And, how do they differ by customer segments?
Competitive landscaping and go-to-market
- What is the competitive landscape and positioning?
- What is the channel composition?
- How does it align and differ by competitor segment?
- What are the key routes to market, distribution points, etc., and which players occupy which positions?
Value generation
- Where has pricing gone, and where is it going? Why?
- Is there a different way that the market should be defined? Why?
- Are there segments of the market that are underserved? How large are those segments, and what degree of opportunity exists within them?
- Is the market overserved? Are there innovators available to make something “less” that works for more customers and therefore expands the addressable market?
- What effective market-development activities are taking place?
- Which participants (regulators; providers; customers; channel; etc.) most influence the market development today? What incentives do they have and what opportunity exists to reshape markets?
The above is illustrative, of course; ultimately, our Thesis Development Support (including market studies and associated “target identification” work) are bespoke to each client’s investment strategy(ies). Let’s talk through your ideas and we will share thoughts and see if we can be of assistance.
