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Actually, it's worked out quite well for some hedge funds. Renaissance Technologies is a quant-driven HF, and it's one of the largest and most successful in the
by vonnik 9y ago
Actually, it's worked out quite well for some hedge funds. Renaissance Technologies is a quant-driven HF, and it's one of the largest and most successful in the world.
The only quantitative VCs worth anything will be the ones who have been operation for many years and who apply the algorithms to the data they have collected during that time, on all the startups they interacted with and invested in. They hold enormous private data stores about those private companies.
I think the real problem is that the best and most famous VCs, like Marc, don't need the algorithms to get access to many of the best deals. They're already overwhelmed with companies good enough to merit a meeting. And maybe they feel as though their funds are doing good enough. But for funds willing to leverage their private data, there's an edge to be had.
- bcherny 9y agoRenaissance is always cited in these conversations, but as you noted, isn't representative of the thousands of quant shops out there. That, and I hear their quant edge is disappearing with competition and they are relying more on HFT over the last decade. Quant VCs just started appearing in the last few years, and it's not clear there is an edge there. As I said, my opinion is it's not likely.
- vonnik 9y agoUnlike the stock market, experienced VCs should be applying quantitative techniques to private data they've collected. That's one way to keep their edge. You don't seem to appreciate the distinction. Of course most public-market quants will see their edge fade if their competition has access to the same data. That doesn't refute the initial success of those techniques.
- bcherny 9y agoBoth public and private have access to prop data. Public has more data, since the companies they're covering are bigger and so produce more data.