Artificial Intelligence Predicts the Success of Startups With Up to 80% Certainty, Using Publicly Available Data

Dite Gashi
Mar 18, 2017 · 4 min read

Making the right investment decisions is critical to the success of VC funds and Accelerators.

Because there is so much data to be screened, processed, and analyzed investors at times forgo tapping into data products. Even if one is sitting on mountains of great data, human analysis of this information is frequently too time intensive to be of use. In the age of AI why not just let machines have a crack at the problem? They take fewer coffee breaks anyways — that’s exactly what researchers from Carnegie Mellon University did and in this blog we are presenting their findings.

So Much Data, so Little Time

The Results

Data Used

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Here it is important to mention that disparity in popularity is relatively high: Only 5,075 out of 59,631 companies had articles about them, the rest had none. Top 10 companies accumulated 13,874 articles in total, more than 1/3 of total collection, backing up the idea that world of startups is populated by several win-it-all unicorn companies.

Attributes analyzed

Basic Features, quantified in numbers:

  • Number of employees
  • Age of company
  • Milestones
  • Company revisions on CrunchBase
  • TechCrunch articles about the company
  • Competitors
  • Competitors acquired
  • Headquarter location
  • Offices
  • Products
  • Providers

Financial Features, quantified in numbers:

  • Investments by the company
  • Acquisitions by the company
  • Venture capital and Private Equity Investments
  • People with financial background investing in the company
  • Key persons in the company with financial background:
  • Investors per funding round
  • Amount of investment per funding round

Managerial Features, in numbers:

  • Companies founded by founders previously
  • Successful companies by founders,
  • Founder experience (months)

According to the study these seemed to be the characteristics that make or break a tech startup on their path to success.

Algorithm Architecture

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Top 10 words from each topic learned by LDA. Topic 3 coincides with mobile, and topic 5 relates closely to ads.

No method is flawless

Takeaways

Decissio

We help early stage investors make better investment…

Dite Gashi

Written by

Co-Founder at Decissio, Blocknify. MBA, coder, hacker, dApp builder, blockchain developer. Loves hiking and cold brew coffee!

Decissio

Decissio

We help early stage investors make better investment decisions

Dite Gashi

Written by

Co-Founder at Decissio, Blocknify. MBA, coder, hacker, dApp builder, blockchain developer. Loves hiking and cold brew coffee!

Decissio

Decissio

We help early stage investors make better investment decisions

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