Market Map/Industry Landscape

I couldn't find anything great on this topic so new thread seemed appropriate.

Question/Topic: for those in PE/growth/VC, how have you approached mapping a particular market or creating an industry landscape? Is there a particular process that your firm(s) utilize that you think is effective (or not), and what do you think makes it effective (or not)? Relatedly, it would be helpful to hear insight on different approaches to thesis/idea generation

• Other good threads on research processes are specifically for public markets; also, the processes described researching a particular company vs. forming a thesis/identifying a trend/mapping a market
• I'm asking about the step prior to researching a particular company, i.e. the initial stages of sourcing (defined as the process that begins with generating ideas and ends with engaging directly with specific company/management team)

Context: previous/current shops (mix of PE/late-growth) have very different approaches... proactive/thematic (not cold-calling) vs. reactive/opportunistic. I imagine there are similarities across firms, but curious to hear observations/insights on what's out there.

For some personal context, I've been having conversations around long-term trajectory with mentors of mine recently. Some have suggested that they would be willing to put up personal capital if I were to strike out on my own and find something interesting (independent sponsor model, at least to start). I've been thinking about it more seriously, but one of my big considerations is that I haven't had many opportunities to refine my sourcing skillset (product of my experiences). I believe I have the personality for it (extroverted, relationship-builder, diligent work ethic, etc.), I just don't know where to begin when starting from scratch. Would love to hear how others think about this as I map out directional next steps, figure out where my time would most effectively be spent, etc. My goal is to understand how to form a view on a particular space, industry vertical/segment... anything to help occupy what is essentially a blank whiteboard at this point to help me brainstorm.

Since I've asked others to share:

• Firm 1 (proactive/thematic): generalist large-cap fund, healthcare/tech/services group (think broad/large industry that's possible to organize by sub-verticals or segments)
  • Divided up the landscape by customer sub-segment/vertical
    • Note: this approach was in place before I arrived, so I wasn't exposed to some of that first-principles thinking. Partially driving my question in this post
  • "Theme-based" investing - identified long-term secular trends that would catalyze and sustain growth (think aging demographics in HC, low tech penetration but adoption gaining momentum for tech, etc.), and thought through categories/areas that stand to benefit. Could be particularly strong tailwind, or a combination of positive trends
    • Note: the above would normally be done hand-in-hand with consultants, if not completely outsourced. This (relative) lack of original idea generation is also informing this post
  • Given the trends and categories identified above, which companies fit that mold? Oftentimes, this was broadly defined. Notably, also done with consultants (or bankers, coming in to present "their view of the market")
  • Reach out to, and begin to form relationships with, applicable companies, prioritizing those where the network of the partner/firm can be most helpful. The companies that ultimately end up as portfolio investments come from this group, through some combination of actionability (they're up for sale, raising a round, etc.) and strength of relationship. Might not be the highest-quality company, but that's the nature of timing
• Firm 2 (reactive/opportunistic): also generalist large-cap fund, industry coverage more ad-hoc
  • Essentially, the priority is to look at anything that's available, which usually involves staying in the loop with bankers to understand what's coming to market in the near future (if anything interesting/digging into pre-process) and the status of ongoing processes (if less competitive, value expectations dropped, etc.). Logically consistent with value-based investing, which this firm has elements of
  • Some deals will be "sourced" such that the dialogue excludes bankers (initially, at least), and this is always the result of a pre-existing relationship. Senior partners inevitably develop these relationships over time, but this isn't an approach anyone relies on to sustain the pipeline. Could argue this is "lucky", though more accurate to say this is right place + right time + right relationship
  • Crucially, not a complete departure from the "theme-based" process described above. Primary difference is that, with opportunistic sourcing, you start with what's available/in market and work backwards from there; identifying secular trends that the company is exposed to (good or bad) is a critical piece of the puzzle - underpins expectations around growth trajectory, which factors into model, which serves as an input to valuation - but that identification process is retroactive and doesn't guide how folks spend their time

Look forward to reading what others have to share. Either way, info on sourcing mechanics and different approaches across the industry is painfully under-served (generalized, outdated, disaggregated), so with enough responses this page could be a resource broadly.