As the new decade begins, it is a new opportunity to get rid of old habits. And Venture Capital can be full of them. Firstly, investing in startups is not a limited activity of an exclusive club anymore. It is now a popular game with players from every background.
As Venture Capital matures, it becomes as predictable as any other industry. In times when information is almost a commodity, having a unique process to capture, validate and consolidate relevant data in order to identify good deals before other investors is crucial.
On average, a venture fund portfolio manager spends 30% of the time collecting data from startups in unstructured formats and scattered sources. Then 70% of the time consolidating fund performance indicators, in order to produce reports to limited partners (LP).
Venture Capital is all about data. This is the basis for a wide but focused deal flow origination pipeline, and a diverse but solid venture fund. Combining a defined process with structured data flowing in from startups and out to partners raises chances of profitability.
In 2019, 150 billion dollars were wasted on startups that failed. In 2020, 90% of startups will fail within the 12 months, mostly due to lack of planning, burning all funding, or not solving no problem at all, according to Crunchbase. Large part of this can be attributed to the scarcity Basically, startups fail for lack of actionable data.
Partly, some of the old habits of Venture Capital derive from traditional beliefs embedded in the Only top-quartile Venture Capital funds generate the returns expected by their investors. The industry, that still relies on closed network information sources and decisions made based mostly on intuition and experience.
While these will continue to play a key role, rather than developing proprietary predictive data analysis approaches have the potential to radically transform Venture Capital. After driving the digital transformation of other industries, it is time for Venture Capital to disrupt itself.
In fact, according to research conducted by The University of St. Gallen and VC firm btov, “startups that submit regular, high-quality reports are shown by the statistics to be better investments than other startups.”.
Correlation doesn’t necessarily mean cause, but frequency and quality of reporting can be a proxy of other, more fundamental, features of successful startups, such as an indicator that justify further investment, which consequently leads to better performance.
Our investor relations portfolio management platform let venture funds to manage investment portfolios, collecting kpis, valuation, captable and documents from startups, while reporting performance and governance data to limited partners and co-investors in real time.
It can also boost investment origination, by streamlining the process of getting data from investment candidates, allowing for objective data-driven pre-filtering, and speeding-up due diligence and closing for the chosen companies.
Investory.io helps startups tell their story to investors, basing their narratives on data.
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