Thread by @ryan_caldbeck

1/ Thanks @ivanataylor1 - interesting article. Over the past year we’ve seen a big uptick in VC firms using (or saying they use) data in bigger ways. I don’t know this firm at all but in general I tend to look at the core problems to be solved and difference vs. CPG.

https://twitter.com/ivanataylor1/status/1010175642653118469

2/ So in tech VC investing – is it difficult to know which companies are hot given all of the press, connections, etc? Or is the harder thing figuring out how much to pay (valuation) and convincing that entrepreneur to take your money?

3/ Perhaps in less mature markets the identification matters more, but I certainly think that in the US what matters in tech investing is convincing the best entrepreneurs to work with you and stomaching some offensively high valuation.

4/ Here is what I mean. VC firm builds analytics to identify signals of growth from afar. VC identifies next unicorn. Presumably when VC looks under hood, the co has great metrics. VC firm submits Term Sheet. Presumably the company’s first call is to Sequoia, USV, etc?

5/ I think some firms have done a good job of pivoting those analytics to try and help the entrepreneur. But I’m not sure the job to be done in US tech VC is identifying the hot company, I think it is “how do I win this company.”

6/ In relation to comparison to #Helio, I also tend to agree with Marc here in this a16z podcast (40:04 mark). There isn’t enough data in tech vc (and the business models evolve/change/are different).
a16z.com/2016/05/30/as-…

7/ CPG is very different: There is a crazy amount of data and biz models are all basically the same. Helio has benefit of far more than just pulling LinkedIn data to see where engineers are going to (a derivative metric of success….or previous funding).
medium.com/@ryancaldbeck/…

8/ Btw – training the model on teams you like might lead to reinforcing bias…..a particularly tough problem in tech vc.
fastcompany.com/40527386/this-…

9/ We will see more VC/PE firms saying they use tech. I keep going back to 1) what problem are they solving with the tech, 2) how real is the tech, 3) what is the actual benefit of the tech (i.e. increased returns, scalability of fund, repeatability of investing process, etc)

10/ If the tech just lets the VC firm call the company first (speed) and doesn't give me (the entreprenur) something more......then my first calls are to @kirstenagreen, @rebeccak46 and the other investors that have proven they can add value and be great partners.