#132 Data Revolution in VC (Signature Block)

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Last week, our friends at Signature Block shared insights from investors, data scientists, and tool builders leading the data-driven future of venture capital. I’ve been fortunate to have a front row seat to this over the last few years at Chapter One, one of the leaders in data-driven approaches amongst early-stage VC’s.

These efforts have been led by Chapter One investor and data scientist, Jamesin Seidel, who was quoted multiple times in the Signature Block article. Here are some of my favorite takeaways:

  • Data-driven algorithmic decisions now make up 75%+ of public market trades — an AUM of $1+ TRILLION. But that wasn’t always the case. Hedge funds drove this revolution back in the 90s, leveraging the parallel explosion of available datasets and computing power.

  • Now, 30 years later, the data-driven revolution is making its way into the world of venture capital. It’s happening fast. It’s estimated that more than 75% of VC deal reviews will be informed using AI and data analytics by 2025.

  • VCs increasingly leverage data for sourcing, evaluating, and managing their investments.

  • Most VC funds balance machine-driven and human-driven approaches, using data alongside qualitative assessments.

Key insights and quotes from Jamesin:

  • “The biggest advantage is speed and scope. We hope our data-driven approaches allow for faster, more rigorous decision-making, broader analysis, and, perhaps most crucially, expanding our networks to focus on high-potential opportunities.”

  • “While we firmly believe in the advantages of data-driven approaches, we acknowledge that venture investing fundamentally relies on relationships and partnerships. Successful investing and company building often lie in the balance between qualitative insights and quantitative analysis. Data informs decisions, but of course, the human element remains irreplaceable in most early-stage venture investing.”

Takeaway: the data revolution will impact all aspects of VC, including investing, fundraising, and across finance/operations. We highly recommend reading the full article linked here for more insights: The Data Revolution in Venture Capital.

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