5 ms·

Capital-as-a-Service

45 points by arikr 9y ago

ztratar 9y ago
While I like the idea, I think the page should be more robust. This feels as though it was hacked together in 2 hours as an experiment.
rock_hard 9y ago
Do they just keep posting the same link every 12 month?
- mzzter 9y ago
  Doesn’t look like it’s been posted before
  - justboxing 9y ago
    https://hn.algolia.com/?query=socialcapital.com&sort=byDate&dateRange=all&type=story&storyText=false&prefix=false&page=0 https://hn.algolia.com/?query=socialcapital.com&sort=byDate&... Either they "pivoted" or someone bought the domain name and rebranded it as CaaS.
    - grzm 9y ago
      Considering it looks like the old URLS work, if anything I suspect the former.
SandersAK 9y ago
I don't get what this does or how it does it. It sounds like they have some mumbojumbo machine that decides who to dole out cash to and how much, but that's unclear. Capital As A Service is, by definition, what VC is. You give capital as a service to your startups. I'm not sure (yet) what is novel about this approach, but if it's "shotgunning money into things based on a set of rules" they might as well just call themselves YC-lite.
- jtmarmon 9y ago
  Sounds like they're saying they're going to programmatically invest in companies based on metrics alone. Which is probably a bad idea, because there's almost always more to the picture than a few statistics can convey. And the relevant statistics vary by what the business does.
  - fataliss 9y ago
    But it allows them to do it at scale, which may or may not reveal itself a good bet. The good thing about their approach is that their scale is only limited by the amount of capital they have to invest. Say out of a 1000 investment based on their metrics, they average a 5% return. Then their model allows them to scale to make it potentially very profitable. Now of course that's assuming that with a larger scale they'd come out positive at all. If not, they'll soon waste all their capital and this will be the end of it :P
    - cdoxsey 9y ago
      It also allows a clever "entrepreneur" to game the system. In 6 months you'll be reading about it here on Hacker News: "How we lost millions due to an algorithmic oversight"
- rpedela 9y ago
  If you click the two links, it explains in more detail the how. Essentially they have developed a set of GAAP-like metrics for early-stage companies, such as MRR, which they use for evaluation. It appears to be similar to investment firms using GAAP to evaluate public companies.
  - SandersAK 9y ago
    thanks, that definitely makes it easier to understand!
- tengbretson 9y ago
  This seems like it would be very susceptible to manipulation by overfitting what the algorithm finds to be "investible" at the expense of actually being a sound investment. I suppose the human version of this is exploitable in the same way.
jlg23 9y ago
A slightly more informative link, IMHO, is the article on medium.com[1], linked from this teaser/signup page. TL;DR, I believe: They defined metrics[2], gather the relevant values from applicants and ask their algorithm: "How much?" Buried in [1] is this gem: In our pilot, we evaluated nearly 3,000 companies and committed to funding several dozen of those, across 12 countries and many sectors, without a single traditional venture pitch. In fact, in most cases the data-driven approach allowed us to reach conviction around an investment opportunity before we ever even spoke to the founders. Worth noting that when we recently looked at CEO demographics, we found that 42% were female and the majority nonwhite. A purely data driven approach to VC investment could level the playing field a lot and I could imagine that adapting that concept to hiring is a) not too far off and b) a great way to reduce biases in the hiring process - if everything works as promised (or rather "as hinted at"). [1] https://medium.com/social-capital/capital-as-a-service-a-new-operating-system-for-early-stage-investing-6d001416c0df https://medium.com/social-capital/capital-as-a-service-a-new... [2] https://medium.com/swlh/diligence-at-social-capital-part-1-accounting-for-user-growth-4a8a449fddfc https://medium.com/swlh/diligence-at-social-capital-part-1-a...
- SandersAK 9y ago
  ok thanks that is way more informative of what they're trying to do. It's shotgunning, but with a relative blind eye to traditional personal network signifiers.
- dang 9y ago
  Since that other url was posted a few hours earlier (https://news.ycombinator.com/item?id=15551505 https://news.ycombinator.com/item?id=15551505), I guess we'll merge this thread into that one and roll back the clock on it to give it a second shot. Seems fairer than the alternatives I can think of.
dang 9y ago
Comments moved to https://news.ycombinator.com/item?id=15551505 https://news.ycombinator.com/item?id=15551505 (except the ones that are about this specific page).

45 points by arikr 9y ago

While I like the idea, I think the page should be more robust. This feels as though it was hacked together in 2 hours as an experiment.

rock_hard 9y ago

Do they just keep posting the same link every 12 month?

mzzter 9y ago
Doesn’t look like it’s been posted before
- justboxing 9y ago
  https://hn.algolia.com/?query=socialcapital.com&sort=byDate&dateRange=all&type=story&storyText=false&prefix=false&page=0 https://hn.algolia.com/?query=socialcapital.com&sort=byDate&... Either they "pivoted" or someone bought the domain name and rebranded it as CaaS.
  - grzm 9y ago
    Considering it looks like the old URLS work, if anything I suspect the former.

SandersAK 9y ago

I don't get what this does or how it does it. It sounds like they have some mumbojumbo machine that decides who to dole out cash to and how much, but that's unclear. Capital As A Service is, by definition, what VC is. You give capital as a service to your startups. I'm not sure (yet) what is novel about this approach, but if it's "shotgunning money into things based on a set of rules" they might as well just call themselves YC-lite.

jtmarmon 9y ago
Sounds like they're saying they're going to programmatically invest in companies based on metrics alone. Which is probably a bad idea, because there's almost always more to the picture than a few statistics can convey. And the relevant statistics vary by what the business does.
- fataliss 9y ago
  But it allows them to do it at scale, which may or may not reveal itself a good bet. The good thing about their approach is that their scale is only limited by the amount of capital they have to invest. Say out of a 1000 investment based on their metrics, they average a 5% return. Then their model allows them to scale to make it potentially very profitable. Now of course that's assuming that with a larger scale they'd come out positive at all. If not, they'll soon waste all their capital and this will be the end of it :P
  - cdoxsey 9y ago
    It also allows a clever "entrepreneur" to game the system. In 6 months you'll be reading about it here on Hacker News: "How we lost millions due to an algorithmic oversight"
rpedela 9y ago
If you click the two links, it explains in more detail the how. Essentially they have developed a set of GAAP-like metrics for early-stage companies, such as MRR, which they use for evaluation. It appears to be similar to investment firms using GAAP to evaluate public companies.
- SandersAK 9y ago
  thanks, that definitely makes it easier to understand!
tengbretson 9y ago
This seems like it would be very susceptible to manipulation by overfitting what the algorithm finds to be "investible" at the expense of actually being a sound investment. I suppose the human version of this is exploitable in the same way.

jlg23 9y ago

A slightly more informative link, IMHO, is the article on medium.com[1], linked from this teaser/signup page. TL;DR, I believe: They defined metrics[2], gather the relevant values from applicants and ask their algorithm: "How much?" Buried in [1] is this gem: In our pilot, we evaluated nearly 3,000 companies and committed to funding several dozen of those, across 12 countries and many sectors, without a single traditional venture pitch. In fact, in most cases the data-driven approach allowed us to reach conviction around an investment opportunity before we ever even spoke to the founders. Worth noting that when we recently looked at CEO demographics, we found that 42% were female and the majority nonwhite. A purely data driven approach to VC investment could level the playing field a lot and I could imagine that adapting that concept to hiring is a) not too far off and b) a great way to reduce biases in the hiring process - if everything works as promised (or rather "as hinted at"). [1] https://medium.com/social-capital/capital-as-a-service-a-new-operating-system-for-early-stage-investing-6d001416c0df https://medium.com/social-capital/capital-as-a-service-a-new... [2] https://medium.com/swlh/diligence-at-social-capital-part-1-accounting-for-user-growth-4a8a449fddfc https://medium.com/swlh/diligence-at-social-capital-part-1-a...

SandersAK 9y ago
ok thanks that is way more informative of what they're trying to do. It's shotgunning, but with a relative blind eye to traditional personal network signifiers.
dang 9y ago
Since that other url was posted a few hours earlier (https://news.ycombinator.com/item?id=15551505 https://news.ycombinator.com/item?id=15551505), I guess we'll merge this thread into that one and roll back the clock on it to give it a second shot. Seems fairer than the alternatives I can think of.

dang 9y ago

Comments moved to https://news.ycombinator.com/item?id=15551505 https://news.ycombinator.com/item?id=15551505 (except the ones that are about this specific page).