The Rise of Intelligent and Data-Driven Venture Investing

Where the best companies are?

Scouting abilities are often refined through years of networking and branding oneself in different markets and also require VC Associates to spend a lot of time in the field.

Note: The data used in the graph aren’t real data.

Whether to invest in a particular company or not?

Though data-driven models have great potential to become efficient and bias-free decision-making tools for investors, it’s still far from being a full-stack solution. But what it can readily do is to help investors check their biases revealed through data and help increase operating efficiencies leading to human time being spent on the parts where gut and judgment matters most.

How? Predictive Engine.

A predictive engine can assess the possibility of a startup success (success in VC is subjective and has to be quantified by the VC) by using different predictive modeling techniques and by analyzing multiple factors that take into account making a startup success. This predictive engine will work just the way a credit score is calculated and will assign a score to the founders, their ability to execute and the possibility of success.

  1. The firm should invest in startup A if the management team can show the relevant background in the field
  2. The firm should invest in startup B
  3. The firm should invest in startup C and form an investment syndicate
  4. Startup D doesn’t meet the minimum requirements and hence should be passed
  • Hone Capital: the Palo Alto-based US arm of CSC Group, it partnered with AngelList to create their proprietary model;
  • Correlation Ventures: A real data-driven investor, it reaches a decision on whether to invest or not in 2 weeks, plus other 2 for extra due diligence.
  • Social Capital: Has recently they built analytics due diligence tool (which is hosted on their webpage) to help them invest in early-stage companies
  • GV (Google Ventures): Is using AI and machine learning to inform their investment process

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Ravijot Singh Narang

Ravijot Singh Narang

Founder @ Acify Technologies. Past: Product, Data Science & Creativity: @meQuilibrium, @Wayfair, @Personify, @Musigma.