Artificial intelligence is guiding venture capital to start-ups
Firms are using algorithms to uncover potential investments.
By Maija Palmer
One of the biggest challenges for venture capital companies is finding interesting investment targets before anyone else. It is often a laborious, travel-intensive job. But machine learning and predictive analytics are starting to transform how an investor puts a portfolio together.
“My job used to be about getting on a plane once a week and going to a different European city to try to find people who were doing interesting things,” says Roberto Bonanzinga, co-founder of InReach Ventures and previously a partner at Balderton Capital, a UK-based VC firm which invests primarily in early-stage European technology companies.
It was inefficient, he says. “I would look at 50 companies a day, maybe 1,500 a month, and of those maybe 100 would get to the next level. We would do one deal a month.”
Often, Mr Bonanzinga adds, promising companies would fall under the radar because they were not actively looking for money. Unless start-up founders were well connected, or in a tech hub such as London or Silicon Valley, investors would have little chance of discovering them.
