A Random Walk in the Land of Venture Capital

Originally Published Spring 2018.

It is seven years since Marc Andreessen proclaimed in the WSJ: "Software is eating the world".

In 2017 we decided to investigate the question: Can software eat venture capital?

Just how hard would it be to build an Artificial Intelligent Venture Capitalist (Think: RoboVC) that could not only compete with the market... but beat the market?

We began the journey by looking for patterns of divergence, convergence, emergence and contagion in the publicised industry data

What we discovered surprised us.

The familar, widely endorsed patterns of investment behaviour at the group portfolio level...

Didn't hold up at the individual investor level.

Mapping the habits of the Top 100 VC's revealed a random walk.

What sports enthusiasts would call a case of "Hot Hands".

Suggesting the popular insights published by the leading VC's on how to profit from the great disruption of paper to be nothing more than stories of survivour bias.

This meant our journey was not just about automating industry best practice but one of deconstructing the narrative to discover the exceptions that prove the rule.

The signal in all the noise.

Clearly the first narrative to be deconstructed is the Venture Capital investment rule book... Next

Copyright Digital Partners Pty Limited 2018