Our thesis

Mahesh Muralidhar
Phase One Ventures
Published in
7 min readDec 16, 2021


Phase One is a ‘Y-combinator style’ venture firm and our mission is to make New Zealand an even happier place by helping to build valuable global startups. Most of our efforts are spent on our ‘Foundations for Growth’ incubator program (ten startups strong right now). We also invest in the startups that make significant progress through our program. We are already invested in a few of the startups.

We are closing out investment into our fund in February, and it is fast getting filled. If you are interested in participating in the fund, please touch base via mahesh@phaseone.ventures.

Here is a long-form of our thesis for your information and feedback. Phase One is built for the New Zealand startup ecosystem, by the ecosystem, so your input is invaluable.

Why are we doing this?

We are going long on Aotearoa. We are a country that has punched above its weight on a range of things. However, over the recent period, our national productivity levels have not grown at the same rate as other countries. What does this mean? It means that we are not matching the economic gains per person relative to other countries. This does not necessarily mean financial gains, but rather the more holistic economic gain that comes from having more resources to spend on infrastructure, education, social issues, climate change, etc.

The startup sector provides a truly viable and powerful opportunity to increase our productivity levels through the creation of global businesses of significant value, built in a values-based way that can make a positive impact in the world. A thriving, booming startup sector, in my opinion, will help New Zealand become an even happier country through these significant economic gains.

As a country we must learn and be able to build businesses that compete at global levels. The All Blacks compete at global levels. Lorde, Taiki Waititi and Peter Jackson compete at global levels. These are examples of Kiwis producing products and services at levels that play to a global audience and global standards. As a country we need to have more businesses and a cultural orientation to dream and deliver at these global levels. Being “New Zealand famous” is not going to cut it, for us to keep increasing productivity levels and therein our nation wide wellbeing. Our entrepreneurs need to know that they can build make a significant dent from a global perspective, that they have the skills to dream as big as they want, that our education system and culture makes available (we need to make opportunities more equitably accessible to everyone) the opportunity to build these global business, that they they can access the know how of how to seed, build and grow globally scalable businesses. That they have access to audacity.

This is our mission, and our hope is that the work done through our Foundations for Growth program will help build these vibrant businesses.

What is the Foundations for Growth program?

Through our Foundations for Growth program, we are helping startups achieve these four things:

  1. A deep understanding of a problem for niche customer
  2. Productification — the capability and learning of launching a product
  3. Product Market Fit (PMF) — traction to the original problem and being able to build something that customers really want
  4. Vision — a clear and often irrational vision of how the world should be and a roadmap to that vision, a thesis, a strategic narrative

We help them achieve these by spending time with them every week, and walking the drunken walk (it is not a linear path) with them to achieve those goals. If they showcase progress on the above items, we then invest in these startups through a convertible note.

What is the thesis?

In summary, we are looking to back companies with a strong connection to New Zealand, who have a deep understanding of the customer problem to a point that they can build a great product on those learnings and have a clear idea of the long term vision for the business.

We believe that learning and building great products from deep customer insights is one of the biggest determinants of success for a startup. We also believe founders should be able to do that with very little funding and with a small team. Maintaining a lean context for as long as possible forces ruthless prioritisation and focus for a founding team — “you have to build something a bunch of customers find really valuable”.

After getting that product build capability going, we help focus on the vision. While pitching and sharing that vision is a valuable skill, the startup sector tends to glorify and train founders mainly on this aspect but not enough on the product build and growth aspect. We are flipping this script.

As a New Zealand focussed venture firm, we support companies that are either owned by a New Zealand citizen/permanent resident, or with the majority of capital deployed within New Zealand (for example, hiring). We want to invest in Kiwis and those whose futures are intertwined with New Zealand’s future. We believe that wherever these people and businesses are based, helping them grow will in turn have a longer-term positive impact on New Zealand — making it an even happier place.

The importance of a deep understanding of the customer problem cannot be overstated. A clear problem statement requires months of qualitative and quantitative research, which should end with a well-defined problem statement. That statement should make it clear what needs to be built (the specific features, UX, UI etc). It is really hard for founders to distance themselves from the vision and their ‘why’ whilst they focus on a niche customer problem and doing so is — as mentioned — a drunken walk. If founders can stay lean and focused, there is a good chance they will be able to identify a set of features that will actually deliver significant value to customers.

The next step is traction against the original problem statement via their solution. This traction can be proven quantitatively, e.g. revenue, retention, engagement metrics or at the least qualitative feedback from customers. Critically the startup would have successfully experienced launching multiple times, learning from those launches and getting iteratively better at creating more value for customers.

The steps mentioned above are rational, and then comes the irrational part of setting up for significant growth — crafting and committing to an irrational vision, a strategic narrative, a thesis. One must have a high-growth view for their business — a story around where they want to be and what they want to achieve (for example, “we’ve done our job if x is true”) anchored by current and future trends and truths.

Vulnerability and authenticity are critical here, with a clear articulation of why this problem is personal, or why building a valuable company is important to the founders. This must be paired with a cohesive problem roadmap to address the vision, aligning it with a broader long-term vision. The longer-term road map will likely be quite abstract but the shorter-term period should be extremely detailed, with a strong financial model underneath. This strategic lens will need to be constantly revisited by founders as it will change with new input and changing context and importantly it will build the muscle of the founding team to be able to be strategic and be able to deep dive into detail on a dime, as needed.

The Foundations for Growth program assists startups in achieving all of this at next to no cost. We bring on board founders who are passionate about making a difference and who are open to going back to the whiteboard and spending copious amounts of time with the customer. An anti-pattern of what does not work with our program is founders who already have a solution and are wedded to their solution. Every founder builds sunk cost bias as they go more and more down the solution, we find that once a founder is quite sure of their solution, it is hard for us to build a valuable relationship given our thesis. We invest in the startups that achieve the milestones above or showcase clear evidence of being able to progress on these milestones.

How we are different

(1) every mentor we connect with our startups will have either been a founder or an early stage startup operator who has seen significant successful scaling. These are people who have experienced building mission driven, “going long” businesses.
(2) we will prioritise support around building great product over pitching and high level strategy. Only after the startup has showcased capability and evidence to build great product will we move to pitching and high level strategy.
(3) we have no preset timeline for each startup to work with, there is no demo day, week on week structure, we recognise that building a great product is a drunken walk and requires ad hoc support by a guide who has #beentheredonethat.
(4) we will prioritise quality over quantity. As per our mission, it is not to be the biggest or broadest but the most valuable supporting agency for startups in Aotearoa.

This is our thesis (there are always exceptions to the rule). We believe these are the founders and startups that will build valuable global businesses in New Zealand. Your support and trust is always appreciated.