April 1, 2024

The Growing Importance of Data Security in a Digital World

Sector and geo specialists are integral parts of most fundraising pipelines

Usman Gul
Founder/CEO, Metal

A small subset of all VC firms tend to specialize in sectors. Such firms typically follow a clearly defined thesis on trends that will lead to growth in a given sector. In the early 2010s, one such trend was technology-driven marketplaces – this created many sector-focused VCs that specialized in marketplaces.

1. Sector Specialists as Domain Experts

Founders often report having high-context conversations with sector-focused VCs. These firms are often deeply knowledgeable about a given space and have the ability to bring domain expertise to investment discussions. 

In a given fundraising process, founders should add at least a few sector-focused VCs that truly understand their sector. This is best achieved by pulling together a list of VC firms that have made 20%+ of their portfolio investments in your specific sector.

In some sectors (such as biotechnology), specialist investors are more important than in others. In most sectors, founders can have high-context conversations to sharpen their thinking by engaging with investors that truly and deeply understand their sector.

2. Geo Specialists in Developing Countries

Similar to sector VCs, geo specialists tend to bring deep expertise around a given geography. For founders in developing countries, such VCs have already overcome the biggest obstacle of being open to investing in their specific country. In such geographies, geo specialists can be an integral part of the fundraising process.

This is best achieved by pulling together a list of VC firms that have made 5%+ of their portfolio investments in your specific continent (along with at least a few investments in your country). Identifying VCs that have made at least “1” investment in a set of similar countries can be a great way to identify firms that may not have invested in your specific country, but are likely to be “open” to doing so.