Startup fundraising powered by AI — Taking the PreSeries Startup Battle to the next level
1. The promise of widely available, fast and performing fundraising
Dear founders,
Over the last year, I have been sharing with you PreSeries’ vision for the future of startup fundraising. We believe that a faster, fairer, more widely available, and more efficient fundraising relationship can be obtained if we adopt an increasingly analytical approach.
The debate within the venture capital community is rapidly evolving: it went from completely negating a data-centric approach to engaging in a data-science hiring spree. But still, when it comes to startup deal-sourcing and assessment, legacy systems are still at the center of most VCs’ IT strategies. Let’s change that.
I have the vision of a fundraising system where founders’ projects get evaluated quickly and objectively, and where as a founder you can spend more time building your business and less time pitching/fundraising. Think of car loans or mortgage loans where vetting candidates undergoes a more analytical approach works, and where you similarly could argue that there’s a large number of uncertainties (both on the borrowers and/or borrower’s economic environment) that affects borrower’s ability to repay successfully.
Now, I know it’s not that easy… I have experienced first hand, that not all the startup data needed is available and ready-to-use, but that does not mean it cannot be achieved. At PreSeries, we started our journey by building the first version of a highly scalable and flexible system using publicly available startup data. Now, with the foundations laid, we’re ready to proceed to the next stage and overcome the inherent limitations of working with public data.
2. PreSeries helps startup fundraising become a software experience
PreSeries’ vision is to become the Operating System of the startup venture community. What does it mean? Not all startup data is publicly available on the internet, only the less sensitive bits. Meaning, founders and investors need a better way to share/access the more sensitive information needed to assess an investment opportunity but without compromising on privacy. Currently, due diligence is a heavy and lengthy manual process, we believe it shouldn’t remain this way!
As a founder, you want the comfort and the safety of having a digital copy of your metrics that you can easily share/disclose to investors as needed. The constant back-and-forth with different potential investors is extremely time consuming.
As an investor, you want to optimize the time spent on collecting and analyzing data, while also maximizing inbound collection. All done on top of a platform that applies models to find competitors, investors, acquirers, calculate probabilities of events, red flags anomalies, detects similarities to previous success/failure instances in the past or generates an automatic piece of feedback for every startup/founder encountered.
At PreSeries, we started by incorporating data from publicly available sources and creating a comprehensive data-science ready startup dataset. We currently have a scoring system that assessed over 400k startups and generated probabilities on wide range of exit scenarios.(More to come soon following our admission to the FinTech Sandbox program)
The next phase is articulating a network of founder-investor’s private databases that allow for the training of proprietary models, that can then be used to answer a number of questions about startups to streamline fundraising and help founders in many other ways.
3. The Startup Battle: Founders invited to join the (r)evolution of VC!
We have done eight “AI Startup Battle” around the globe in the past in collaboration with PAPIs.io since 2016. Check our previous blogpost for videos and results, but the main idea is that we invited a few startups to participate in a competition where the decision to invest (or not) was done by our AI.
In the last edition in London in April, Thomas Stone from AI Seed committed GBP 100k directly to the winner of the competition, setting a new milestone for automated startup investing. (Is there any other startup investing you’ve heard of whose decision was done 100% algorithmically? — no cooking…)
So… Why the need to change? Well, there’s a limitation… our current dataset is comprised of only publicly available data. In order to generate better predictive models, it is imperative to start integrating private startup information.
That is why we are announcing the launch of the first Online Startup Battle where PreSeries will be assessing startups based on a mix of public startup information and proprietary information shared privately by founders. Virtually every startup from around the globe is eligible to apply. Only requirement: an internet connection!
4. Online Startup Battle — Phase 1 — Portfolio Phase
4.a The process:
- We work with founders, with all sort of outcomes, to build the new training set to be applied to the AI Online Startup Battle. We want to build a representative dataset, so we are particularly interested in learning from founders where the business:
- Did not work as expected. Building a business is hard, and there’s a lot to learn from these experiences. I am particularly grateful to be learning from these founders.
- Became public/acquired: congrats! You probably have written a post and frequently share advice at schools or other venues. Your company’s data is a beautiful way to also reflect on your experience and give back!.
- Reached “Stand-by” as defined by 3 years of consecutive positive net profit. That’s important too, you probably were able to grow with little VC money, no pressure to get to an exit and operate a beautiful business!
2. We have developed what we believe is a representative set of metrics for all sort of startups, or what we have come to call “Generally Accepted Startup Principles” or GASP. We hope GASP can become an standarized way to start the investor-founder dialog, increase review and answer rates and improve feedback mechanisms.
We’ll go into the details as we talk about it during our 1:1 conversation to complete all the data points throughout the company milestones. It’ll be fun!
3. We will work with each of you to complete these metrics across all the company milestones. All the data collected will remain private and will never be disclosed. We’ll sign an NDA individually with each of you.
Remember, we are together on the journey to create a better fundraising experience for future founders. We don’t have any interest on disclosing/distributing data.
4. We will train a number of models to predict multiple events, classify companies, find associations and anomalies on this expanded dataset.
5. With all that, we’ll be ready for the battle and assess startups on the basis of publicly available and internal-proprietary data.
4.b What’s In It For You:
I hope you feel inspired to participate in an effort to develop new cool tech that allows to create a better fundraising experience for the founders of the future generations. However, in appreciation of your participation in the project, we’d like to offer you the opportunity to try the as-is version of the product and other really cool ML-world related perks:
- We will provide free 1-year access to all founders that participate in this experiment to the PreSeries Professional Account.
- BigML, which powers PreSeries, will also be offering a personal Pro free account that you can use for your current organization and/or as a great cornerstone ML framework to get started on your new venture.
- Our friends at PAPIs.io, organize one of the top AI/ML conferences in the world with top academia, corporate and professional audience. They will be collecting applications to participate in the next editions of the conference/showcase your startup…
4.c Ready to get started?
- If you are a founder reading about this and want to participate, please let us know by completing this form. We will get in touch soon to tell you more about the project, hear your thoughts and populate your profile.
- If you are a GP, large or small, and feel this is something you should be doing at your portfolio level, get in touch with us at info@preseries.com or reach out directly to me.
- If you are an LP, think that you are sitting on top of gigas of startup data and feel that you could be doing something about it, we’d love to get in touch as well and tell you how we can help better understand startups, and as a result, the VC firms you invest in. Get in touch through info@preseries.com or reach out directly to me.
- If you have any feedback regarding the battle, I would love to hear from you any ideas/connections to make the battle grow stronger. Reach out at moreno |A-T| preseries (dot! com
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