VCs have brought very important innovations to the world, but there have been hardly few very important innovations in the VC world, to name a few- ICOs, Crowdfunding, Venture builders, etc. However, with advancements in Artificial Intelligence and availability of data at almost no cost, the VC Industry is a fertile ground for adopting data-driven strategies to ramp up the deal sourcing and to train their gut with intelligence gained from data. As an investor, there are three important things that you need at your tips most of the time: Where the best companies are? Whether to invest in a particular company or not? What is the optimal distribution of reserves for follow-on investments?
Ask a successful startup seed investor, "How do you do it?" Press harder and you will likely hear, "It takes years of apprenticeship and experience in pattern recognition." The myth of expert magic was challenged decades ago but it still persists. If you wanted to know whether you had cancer or not, you were better off using the algorithm that the researchers had created than you were asking the radiologist to study the X-ray. The simple algorithm had outperformed not merely the group of doctors; it had outperformed even the single best doctor.
In this interview, Hone Capital managing partner Veronica Wu describes how her team uses a data-analytics model to make better investment decisions in early-stage start-ups. Veronica Wu has been in on the ground floor for many of the dramatic technology shifts that have defined the past 20 years. Beijing-born and US-educated, Wu has worked in top strategy roles at a string of major US tech companies--Apple, Motorola, and Tesla--in their Chinese operations. In 2015, she was brought on as a managing partner to lead Hone Capital (formerly CSC Venture Capital), the Silicon Valley–based arm of one of the largest venture-capital and private-equity firms in China, CSC Group. She has quickly established Hone Capital as an active player in the Valley, most notably with a $400 million commitment to invest in start-ups that raise funding on AngelList, a technology platform for seed-stage investing.