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Sector Investing

What actually differs, sector by sector, in how you evaluate an opportunity - SaaS, AI, fintech, healthtech, climate, deep tech, consumer, marketplace, biotech and hardware each reward a different lens.

One lesson per sector, from SaaS to biotech

Lessons

  • SaaS lives on retention; marketplaces live on liquidity and take rate — Software businesses are judged on recurring revenue, expansion and margins. Marketplaces are judged on whether buyers and sellers reliably find each other, and how much of each transaction the platform keeps. (12 min)
  • AI companies can have software growth with hardware-like costs; deep tech trades time for defensibility — AI businesses must be judged on the cost of running models and on what protects them from competitors using the same models. Deep tech companies face technical risk and long timelines before revenue, in exchange for harder-to-copy advantages. (12 min)
  • In fintech, regulation, partners and losses matter as much as the product — Financial technology companies depend on licences or partner banks, earn thin margins on large volumes, and can face fraud and credit losses that do not appear until later. Evaluating them means looking beyond growth to compliance and loss rates. (11 min)
  • Biotech outcomes are often binary; healthtech outcomes depend on who pays — Biotech value is driven by clinical trials with low overall success rates and long timelines. Healthtech depends on proving clinical or economic value and securing payment from hospitals, insurers or health systems. (13 min)
  • Climate and hardware companies need capital before revenue and margins before scale — Physical-product businesses face manufacturing risk, inventory, lower gross margins and large capital needs. Many climate companies also depend on policy and on project finance to deploy their technology. (11 min)
  • Consumer businesses live or die on acquisition cost and repeat purchase - and some questions apply everywhere — Consumer companies depend on the relationship between customer lifetime value and acquisition cost, brand and channel. Across all sectors, unit economics, retention, capital needs and time to revenue are the questions that travel. (12 min)

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