VCs double down on data-driven investment models – TechCrunch

New efforts could automate the role of an

VCs double down on data-driven investment models – TechCrunch

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The company sells a subscription-based AI product to investment managers at hedge and private equity funds, helping them lower the risk profile of a given investment by better understanding the health of a business using thousands of unstructured data sources. “There’s a huge spur from large asset managers trying to build tools themselves using ML tech and AI but can all asset managers attract engineering talent to do this themselves? Absolutely not. ” TruValue co-founder and CEO Hendrik Bartel tells TechCrunch. “I don’t think all asset managers have it in them to become a software company.

Twohig declined to disclose the size of LSVP’s data-focused team; a representative for LSVP said the size and scale of the team is part of the firm’s “secret sauce. “You have to strike a balance between being well-informed people with a data advantage by using all the tools and software while avoiding the temptation to go too far,” Twohig tells TechCrunch. “At the end of the day, this is still something where we are looking to take a craftsman-at-scale approach to our investing as opposed to just ‘hey, we’ve got an algorithm and it’s gonna spit out whether we fund you or not. “When people are building stealth-fighter jets, they are handcrafted, they are highly informed by data and architectural drawings but they are still hand built with a lot of precision,” he added.

Bartel refers to his approach — and that of CaaS Technologies — as “an augmentation of an analyst. ” At venture capital firms, analysts are often charged with researching businesses and perusing available business and financial records to help a firm decide whether to move forward with a startup. “It’s virtually impossible for an analyst or an asset manager to cover all the companies in its portfolio,” Bartel said. “To read all the information about a publicly held company, it would take an analyst six years.

According to Younis’ LinkedIn profile, which indicates he spent nine months at Social Capital in 2018, CaaS Technologies is “a collection of quantitative diligence tools developed to help VCs evaluate investment opportunities and make better data-driven decisions.

CaaS Technologies’ approach resembles that of Social Capital’s “magic 8-ball,” a quantitative tool for due diligence built by former Social Capital partner Jonathan Hsu several years ago.

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