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Thematic venture capital funds have come into vogue over the last decade. Firms used to be generalists and VC was an artisanal craft largely organized by stage and fund size. Today there are hardware funds, B2B funds, and funds with very explicit theses around the types of companies or founders they invest in.

Corporations have funds. Incubators have funds. The venture market has come to parallel the ETF market with a proliferation of investment flavors and vehicles. Funds have even been raised to address highly specific trends, platforms (e.g. iPhone Fund, Facebook Fund, Google Glass Collective), even numerology.

Part of the reason for this proliferation is that themes are tremendously useful. They provide guideposts for the investors and help differentiate themselves to entrepreneurs. Union Square Ventures backs startups that show evidence of network effects. This operating philosophy, paired with the team’s excellent track record, has led to amazing returns.

Similarly, the Foundry Group, Collaborative Fund, and IA Ventures use core themes to define their investment approach. This allows funds to truly go deep in a domain and develop an encyclopedic knowledge of the players and technologies. Additionally, because they’re explicit about their focus, it is easier for entrepreneurs and co-investors to identify whether they would consider a given investment or not.

There are also domains that require hyper-specialization. Biotech, for example, requires a deeper understanding of science than other fields given the risk, timelines, and the very different set of metrics by which they’re evaluated. VCs need to have an innate sense of the market since biotech companies rarely have revenues when they go public or get acquired.

Despite this, I still believe firmly in the “un-thesis” for seed investing. At the early stage, the trends have yet to avail themselves, and thus it’s hard to pre-determine what type of startups to invest in. This is where the VC adage about “pattern recognition” breaks down.

I believe that the successful elements of an early stage company are far more similar than different. Passionate founders, markets ripe for disruption and the ability to recruit great talent. As the line between tech and mainstream industries blur, as with Uber and Airbnb, the chances of innovation coming from almost anywhere has increased dramatically. Its not just coding prodigies and Ph.D.s starting companies anymore. Art schools have minted more mega-unicorns than MIT in recent years.

As an investor, I’m “stage focused, sector agnostic.” My own experiences and overlaps across three different start-ups in three very different industries, inform my view that company creation is quite serendipitous and random. But it’s more than that — here’s why.

Themes get thrashed by macro factors

Historically, themes tend to get thrashed by macro trends. KPCB made a hard turn towards cleantech, and even raised a fund around it, only to watch the price of oil plunge as fracking and domestic reserves came on the scene. Cleantech is certainly an area of much needed innovation and hopefully we’ll see more Teslas and Opowers in the future, but most cleantech bets haven’t proven to deliver great venture returns.

Near Field Communication was once a hot theme in VC circles, but poor reception for NFC left a lot of LPs unhappy. The semiconductor market has had boom and bust cycles that have made many casualties of VC funds. The same is true of telecom. And A16Z and others announced they would invest in a consortium of Google Glass apps, only to have the product line disappear.

A thesis is often VC branding

The venture capital market has become increasingly crowded. When Founder Collective was started, there were a handful of seed funds, now there are hundreds. VCs are all competing for a finite amount of cash from limited partners. In order to stand out and raise money, VCs without a proven track record often come up with elaborate theses for why they will be able to attract founders and create double digit IRRs.

In a bull market like the current one, these themes resonate with LPs looking to deploy capital. However, fund lifecycles are typically pegged at 10 years. Many things change in that period. Almost any thesis crafted in 2005 would have been rocked in 2007 with the rise of the iPhone.

The thesis might still be viable with significant adjustment but would force the managers to explain the change in investment strategy to their LPs.

Themes can blind investors to great ideas

The big challenge with thematic investing is crafting something that is broad enough to catch outliers while being directed enough to drive decision making. Let’s play a little game and try to identify themes that could have predicted the biggest Unicorns.

Before Airbnb had a $20 billion valuation, it was a punchline, famously dismissed by almost every VC in the Valley and NYC. Airbnb is an incredible embodiment of the social/mobile/local theme that was captivating investors’ attention at the time. But to VCs in the moment, it just looked like an update to decidedly uncool companies like VRBO and HomeAway.

Hardware, is awfully broad to be considered a theme. A VC saying they’re investing in hardware emerging from the experts in the Chinese supply chain might have helped them spot DJI or Xiaomi, but they’d have missed Warby Parker. Getting into any one of those deals could be transformative, but you see how easy it is to miss great companies.

You can connect the dots retrospectively, but VC is a volatile business and great companies come from odd spaces.

I faced this challenge when I was becoming a VC. Two of my biggest successes involved taking technologies from a university lab and bringing them to market. I knew, though, that I couldn’t spend my entire career scouring the labs at universities sourcing deals. Branding myself as the “university spinout” guy didn’t feel like a viable long term strategy for success.

In the end, the best advice is to play your game. In other words, we VCs would do best to play to our respective strengths rather than limiting ourselves to narrow themes.

Micah Rosenbloom is a managing partner at Founder Collective, an early stage VC firm based in Cambridge and NYC that has made investments in 150 companies, including Uber, Buzzfeed, and HotelTonight. Follow him at @MicahJay1.

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