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How Software Will Change Venture Capital
- gjmulhol 11y agoI will caveat this and say that I am speaking from an entrepreneur's perspective, and OP obviously has more experience investing than I do, but I am skeptical of taking this line of thinking too far. There is a problem with this model—and I am not saying it won't work—that VC firms get the best deals by having high deal flow and have a reputation for working supporting entrepreneurs (or in some cases firing the CEO and making the company extremely successful). If you treat the VC market like the stock market, with quant trading firms, you will: (1) miss deals because oftentimes once a company has any visibility it is too late to get in their investment pipeline, (2) make bad decisions because it is hard to extrapolate from very little data. To your point about no management fees, unless you are independently wealthy, how do you cover costs? I ask not as a rhetorical device, because it is not possible to propose such a thing without a plan, I am just interested to know how you think about it.
- bonanzinga 11y agoLet me first thank you for the comment. I try to answer your questions: 1 - RE Software - We have no intentions to transform investing in startups in stock market style investing. As mentioned in the article we use tech in 3 areas one of which is discovery and structure deal flow. We do not believe in automating investment decisions. 2 - Re ZERO management fee - We will announce in few weeks how we made this is possible. I can anticipate that this is a structural chance in the way how we built the firm more than the result of 3 rich boys waking up to the investment fever.