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> Inputs into "The Machine" include round size, syndicate partners, past investors, industry sector and the delta between prior valuation and current valuation.
by aaavl2821 8y ago
> Inputs into "The Machine" include round size, syndicate partners, past investors, industry sector and the delta between prior valuation and current valuation. The algorithm then ranks deals on a 10-point scale, with green said to represent 8 or above
I'm sure there are more inputs than this, but from that list you'd imagine they basically pick deals based on who else is investing. which is not that different from many other VCs. at least in biotech, i typically see GV co-investing in deals led by other top notch VCs
- _hyn3 8y ago> they basically pick deals based on who else is investing. Another phrase for that is "herd" mentality, which will hopefully result in de-risked "safe" investing, but VC's are supposed to be looking for true breakout possibilities. If LP's wanted safe, they'd buy Treasury notes.
- rdlecler1 8y agoVCs are looking for breakout returns for investors. A syndicate of top VCs can be a kingmaker event that also discourages other investors from backing would-be startups.
- shanghaiaway 8y agoNow they have an alibi for their herd mentality
- writepub 8y agoThere are huge gains to be had in herd-ing. For instance, if everyone herds towards Uber instead of Lyft, you effectively pick Uber as the winner by merely herding, instead of merit or market economics
- taurath 8y agoAnd in that case, the worst possible outcome is to have many competing funded companies in the same space. Merit doesn’t enter into it much.