The Future of VC
A 2.12 Webinar Series
Join us for an exciting exploration of the Future of Venture Capital. As a VC firm that invests in disruptors, we have to innovate as well! At 2.12, we use the very technology we invest in, including a machine learning algorithm to identify the best entrepreneurs at scale. In this webinar series, we bring together top investors and experts to discuss how VCs can use Data and AI to perform better, and to examine the evolving landscape of the VC industry. Gain insights into the Future of VC, and be a part of the conversation that will shape the industry for years to come. Enjoy the show!
Episode 1 with Ashu Garg, General Partner at Foundation Capital, Ali Nahm, Investor at Tribe Capital, and Dave Yarnold, ex CEO at ServiceMax.
Summary. Moderated by longtime venture journalist Alastair Goldfisher, Ashu Garg, General Partner at Foundation Capital, Ali Nahm, investor at Tribe, and Dave Yarnold, former CEO at ServiceMax delved into the value of data science in the VC industry and whether machines can replace human investors. Here are some of the takeaways: 1) Ashu noted that the venture community has evolved as it has turned its focus on the earliest of seed-stage companies. 👉🏻 "The challenge for all of us in venture collectively is trying to find companies when there isn't a PitchBook entry." 2) Ali pointed out that the Founders of Tribe Capital came together because they saw the promise of using data science and how they provide hundreds of reports on companies to their founders every year. 👉🏻 "The way we look at all these companies and decide how to invest, it's both a people problem and a software problem. We really believe that you need to have both machines and people making decisions in venture." 3) Dave, who has 35 years of experience in enterprise software, helps coach and mentor startups, including new portfolio company CEOs at 2.12 Angels, said he was skeptical when he first heard about the 2.12 approach of investing based on data science but finds our founders to be "very coachable and wanting guidance, but not taking it blindly. So They're thoughtful, deep thinking, resilient." He added: 👉🏻 "What's stunning about the AI approach is how you find it using an algorithm and actually get a really interesting hit rate. Based on what I've seen, I think the hit rate will be pretty high on this group of entrepreneurs." 4) In response, Ali added, "Data science is one component of being able to provide value to founders really fast. Our most important moat truly is our data platform overall and the full set of data we've been able to collect over the years." 5) Ashu said that the data science approach in VC is not either data or investing from the gut. 👉🏻 "We are in the business of extracting signal from very noisy and very sparse data about people who have spikes and who have severe flaws. The vast majority of founders have both. You can collect all kinds of data. The question for us is how much weight do we put on their flaws relative to their spikes? At the end of the day, it comes down to a judgment." 6) Dave wrapped it up: 👉🏻 "It's always been a people game, assessing founders and their peaks and flaws because we all are flawed as humans. At the core here, it comes down to great entrepreneurs who are determined, and they're resilient, and they have a clear vision of whose life is their solution going to make it better. I love this kind of mixing of people assessment and then these data trends. I think it's cool, and I'm happy to be participating in this experiment."
Episode 2 with James Currier, General Partner at NFX, and Dan Abelon, Partner at Two Sigma Ventures.
Summary. In this second episode, James Currier, General Partner at NFX, and Dan Abelon, Patner at Two Sigma ventures, discussed the changing market conditions, how they leverage data-driven methods and support Founders with value-added services. 1) Current market situation: - Decrease in valuations up to 85%. - Increase in deal flow. - LPs view the reset positively, expecting good vintage investments over the long term. 2) Both firms leverage their broader employee networks and internal technology for diligence, company support, and sourcing new companies in a data-driven way. 3) They constantly strive to improve the support they offer Founders through Kaizen philosophy and software development. More resources will be available outside VC firms due to expanding knowledge and increased interest in entrepreneurship. 4. James and Dan remain optimistic about the future of venture capital, believing that there is still potential for mega companies to be founded even in this cycle. 5) AI will significantly impact the VC industry, particularly at later stages. It could also improve diversity by helping to identify great Founders outside VCs’ networks.