AI: The Venture Sixth Sense

Let's talk about The Five Senses of Venture, and discuss what exactly its sixth sense is and how it will transform this market's entire landscape.



Systematic Ventures offers partners a fully scalable on demand Venture Sixth Sense©. We don’t seek to replace just to enhance. We build co-bots not robots. Our aim is to do what machines can and do, better – leaving our very human clients better able to discover, measure and leverage their uniquely human skills.



The Five Senses of Venture:


Sight

We know what we have seen and what we expect to see. Most decision makers have at least some experience selecting between options they have found, seen, been told to look for.

  1. Sight for investors involves looking at competing companies, sectors, ways to gain exposure to an opportunity (convertible note structures, equity type/terms, venture debt type/terms.

  2. Sight for entrepreneurs involves knowing your sector, competitors, addressable market, team, evaluating investors and types of investment (convertible notes, equity, venture debt). See the landscape, viewing challenges, partners and opportunities.

  3. Sight for allocators to funds, SPVs, portfolios mean knowing what strategies and managers make sense to look at, which verifiable track records of superior post fee returns are worth putting under the microscope.

SV Sight: Our machine learning systems look at several hundred thousand companies and millions of rounds. We train tools to see patterns at scale- pattens that we humans can’t see at speeds we cannot attain. We can scale with machine learning. We ask the questions that you ask but, can ask questions that you cannot. Together we can reframe your questions and find valuable new answers. We build co-bots not robots. With sight, as elsewhere, we try to add a sixth sense and not dull or replace what only us humans can do.


“We build co-bots, not robots. Adding an AI sixth sense does not dull or replace what only humans can do.”

Sound

We know what we have heard from our communities, online, in the press and across our industry experience. Most decision makers have at least some experience listening to news, buzz, pitches, options. We all exist in the swirl of incessant opinions, pitches, denouncements and promotions. It is hard to get through a day without hearing someone announce what is hot and trending and what is not. We try to listen to deeply and broadly and filter the signal out of all that noise.

  1. Sound for investors involves listening to theories of the economy, sectors’ growth ebb and flow, which teams, firms are doing well and poorly. Buzz, rumor and chatter are essential because there is endemic informational asymmetry in venture. Many venture decisions depend on forecasting an unknowable future using limited inputs of uncertain accuracy.

  2. Sound for entrepreneurs involves listening to advisors, listening in on competitors, talking to and hearing from team and mastering the buzz – or stealthy silence- around your firm. Controlling your story is essential to success.

  3. Sound for allocators to funds, SPVs, portfolios require knowing which partners are coming and going and who is actually selecting and engaging portfolio companies. Who made the decisions that boosted and cratered last quarter, year, fund?

SV Sound: Systematic's machine learning systems look at several hundreds of thousands of postings, blogs, articles and announcements. We train our scrappers and natural language processor to find and read more everyday than several people can read in a lifetime. To see patterns at scale- pattens that we humans can’t see. We ask the questions that you ask but can ask questions that you cannot. Together we can reframe your questions and find answers.


Scent

We all have some experience with the unease that come from smelling something that is off, past its prime or past its sell-by date. It is true struggle to determine the difference between a new smell and a bad smell. However, this is a defining challenge in venture. Now, more than ever, we need to hear from and embrace new voices and new geographies of disruption. How do we determine what smells new and what just smells off? We can just look for the familiar. Many do. We can look at history and metrics to venture out of our comfort and into compelling? We must trust our sense of smell to avoid the spoiled, corrupted, incompetent or ill intended.

  1. Scent for investors involves diligence that does not lapse into a demand for conformity and sameness. This is a challenge. What smells new and uncomfortable in a way that gets your allocative digestive juices flowing? What feels new and likely to upset norms and generate huge returns? Understandably, we rely on personal experience and bias very often. True success attaches to folks who have a sixth sense for people; such knowledge is often expensive and slow to build.

  2. Scent for entrepreneurs involves trying to get a feel for the digestibility of senior team hires investors and pivots. As with investors, you have to trust a gut that has limited dining experience. There are bad oysters and new favorite foods all swirled together and unmarked, out there. We offer another nose.

  3. Scent for allocators to funds, SPVs, portfolios require knowing which partners are truly out there with hands in the dirt. Allocators need to have a sense of where you are working- close to portfolio companies or many levels removed, charging rich fees for uninformed access. We all know great asset aggregators are rarely great managers. How is that division worked out, who is coming and going?

SV Sound: Cannot and does not try to replace human intuition. We simply try to be additive. Our systems allow you to see how others have done, who has invested in every way that you are contemplating. How did and are different decisions evolving? We can tell investors how those commitments have and are/are not working out. We can show entrepreneurs who has tried and succeeded as well as who has tried and failed. With scent, as elsewhere, we try to add a sixth sense and not dull or replace what only use humans can do.


Our systems allow you to see how others have done, who has invested in every way that you are contemplating. Systematic's AI can tell investors how those commitments are working out, and show entrepreneurs who has tried and succeeded, who has tried and failed.”

Taste

Taste is a powerful force in venture. We see taste as the individual/group expression of education, interest, focus. We all have interests’ areas, expertise and have to choose and focus. Specialization has been increasing in venture and many investors, partners, funds are focused on a one stage, geography, sector. It is a struggle to see broadly, to contextualize your chosen stage, geography, sector. This is key to position the choices made to the larger setting. Are opportunities uniquely compelling in your taste areas? How does your performance measure in your area(s) of taste? This is a defining challenge in venture. We need breadth of view and consistent measurement of performance against similar, and dis-similar, alternatives. We have to constantly test and retest our context assumptions, tastes and performance. Machine learning is perfectly suited to this daunting task. We have built systems that do this and can customize those to answer your challenges, at scale.

  1. Taste for investors involves the stage(s), geographies, sectors, networks, co-investors they know and engage. Tastes matters and is often a sage guide. Knowing your sector, geographies, co-investors and stage is essential. This requires regular reporting and research. Properly benchmarking your deal success and your deals done away, is essential here. This is now possible and will likely drive enhanced performance as it is instrumentalized.

  2. Taste for entrepreneurs involves choosing product and go to market strategies. Taste shapes valuations, round size, messaging, round timing and investor selection. In the absence of rigorous and comparable data many are left to trust taste. Taste and bias are different but, related.

  3. Taste for allocators to funds, SPVs requires knowing what benchmarks are, how different approaches have performed and looking at cross correlations.

SV Taste: Cannot and does not choose taste, we cannot. We are additive. Our systems allow you to benchmark sectors, geographies, life cycles, performances. We know you need to see how others have done and are doing. Investors can look at and for co-investors. Entrepreneurs can see who has excelled in investing in their sector, life cycle and geography. We are excited to custom build co-bots that benchmark and measure deals done, and deals done away. Greater insight will build better results in and between sectors, stages and geographies.


Touch

Touch means close contact with companies and the teams that build them. We are building a platform that allows companies to flag if and when they are interested in being contacted, by whom and how. We will couple this with a two-way sensitive matching engine. We can show users whom our systems have detected is historically an ideal match as an investment, investor or fund manager. Direct introductions can be made at scale as users opt in. We see ourselves serving a next generation discovery role. You will have to make the second move, but we can narrow in and focus efforts from investors, firms and allocators.

  1. Touch for investors is constrained by network, team size, geography. Across the essential early stages seeing a crosscut of the possible is tough, expensive and arduous. Relationships with graduate schools, incubators, accelerators, angel investors are difficult, time consuming to build and tend to be narrowly focused. Finding and reviewing ideas and teams is required as there is often only embryonic business to dig into. Even in later stages knowing enough about target companies is always a challenge and never complete. We all select from who we can touch.

  2. Touch for entrepreneurs involves choosing how much time to spend reaching out for business development, fund raising. It is hard to know who is in your space, doing what, planning which move. Few entrepreneurs are armed with a real sense of who might be interested in investing and what valuation similar firms are getting. Like investors, entrepreneurs are left to order off of small and concentrated menus. It is hard to believe this pinhole view captures the full sweep of opportunity.

  3. Taste for allocators to funds, SPVs requires knowing what benchmarks are, how different approaches have performed and looking at cross correlations.

SV Touch: Our systems allow you to discover, run reports, benchmark, rank and sort companies in minutes. If a dual match is made by our systems, we can make direct introduction. We also maintain a network of partners who specialize in direct access to opportunities. We offer every venture backed company in our system a free valuation 2 times per year. Our independent 3rd party valuations are already valued assets in many data-rooms and we expect this will grow. We offer entrepreneurs and investors our profiles of them free of charge if they are willing to correct any errors, we have in our records on them. We are building a more meritocratic and inclusive venture space where place, sector, ethnicity, personal network is less restrictive.


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