Starting my career as an MIT scientist, experimenting in-vivo with novel drug-delivery systems, I never thought I would be working or investing in high tech startups. Intuition is important and it does lead to a healthy hypothesis, however, to make a well-rounded decision, I still believe science, logic, and data is a way to derive to the optimal conclusion. For example, when you look for a $40 dashboard camera for your car, you research the hell out of the internet, read specs, reviews, watch YouTube videos and more, you leave nothing to intuition. But I find that when seeking an early stage investment opportunity, investing $500K or even $1M in a startup with no commercial traction, at the end of the day, besides fitting your general investment criteria, investors simply trust their intuition when proceeding with a specific startup.
While I agree that general impression, an impressive CV and the enthusiastic personality of the entrepreneur will trigger a good or bad vibe, it rarely shows a sign of commercial success or a good ROI. Most investors will agree. Studies have shown that most successful CEOs are introverts, that do not pass well in one-on-one meetings. So are you missing out on good investment opportunities because of bias intuition?
AI and big data analytics in Venture Capital
Early-stage investors face the most uncertainty, each with its own technological and market risks. After speaking with many of these investors, while they have hundreds of investment opportunities to consider every year, they have no real way of de-risking the deal flow. In fact, this hasn’t changed in decades. This is where I believe technology such as big-data analytics and AI should become more than a target investment criterion, but come into play within the VC industry.
I believe a hybrid approach is the best, meaning use big data analytics and AI to filter out the top companies to review, then meet them in person and use your intuition to choose the founders you feel have the best chances of success.
At VCforU we funnel over 12,000 startups with around 400 new startups joining every month into companies with a higher chance of success, based on big data analytics (let’s not throw around “AI” so easily) which we call “The Circle”, we can identify high investor interest, high strategic partner interest in the specific company or domain, these surly reduce risks compared with today’s mode of operation which is to work in the dark. Once we help you sort out the best companies in your domain using The Circle, it is time to meet with them and “look the entrepreneur in the eye”.
Here is how it used to be:
Here is how it looks with VCforU:
Co-Founder at VCforu.com