Venture capitalists picking up the Moneyball strategy. It’s a fascinating idea, and I know plenty of my peers are working on algorithmic approaches to better their craft and gain an edge. As I see innumerable pitches that leverage “big data” as a key aspect of a business, and read about all of the ways that big data is changing the world, it seems natural that it will infiltrate the world of venture capital. Whether it works or not remains to be seen.
As someone who has worked at both ends of the spectrum — as a CFA performing public equity analysis, and an early stage investor — this is more than just a passing interest for me. I pay close attention to data, and I firmly believe that people who understand the numbers better than their competitors, will ultimately win. In public equities, some groups have clearly found ways to outperform using algorithms over time periods.