Data driven venture capital model

Jul 18, 2019 | Publisher: Techcelerate Ventures | Category: Finance |  | Collection: Investments | Views: 2 | Likes: 1

Data Driven: Venture Capital O W N T H E Future. Our mission is to help people see and make sense of the future so they are inspired and able to drive their business forward. Data Driven: Venture Capital 3 TRUSTED BY THE WORLD’S LEADING VENTURE CAPITALISTS “Think about the fundamental value chain of venture capital. Find investments, assess investments, build market leaders… CB Insights is positioned to be a market leader in helping companies find investments” Pat Grady Partner, Sequoia Capital Data Driven: Venture Capital 4 Venture capital is a competitive game. Here’s how data can give you an unfair advantage. From sourcing deals to analyzing markets faster to finding talent for your portfolio to identifying follow-on investors to pinpointing acquirers, data is power. Data Driven: Venture Capital 5 From conversations with our VC clients, we identified 21 data-driven strategies the world’s top VCs use to gain an advantage at every step of the VC lifecycle. Data Driven: Venture Capital 6 FIRST, WHAT VCs DO This is the venture capital circle of life. Data, as you will see, is a weapon at every step. Data Driven: Venture Capital 7 See the Deal How to build a deal sourcing engine that sees the right deals at the right time Data Driven: Venture Capital 8 SEE THE DEALS EARLY Determine who is going to raise before they’re raising The average time between rounds is Seed to A = 17 months, A >>> B = 18 months, etc. Armed with these facts, you can build a constant feed of companies who are about to raise again. Sit back and get to companies early. #1 Data Driven: Venture Capital 9 SEE ONLY THE RIGHT DEALS See every deal in geographies & industries of interest You’re a series A investor interested in fintech and want to see every angel or seed fintech deal in the last 12 months. Or you want to see every Silicon Valley early stage deal likely to raise in the next 6 months. Done. #2 Data Driven: Venture Capital 10 FIND THE HEROES. LOSE THE ZEROS. Quickly target the best companies Use Signals such as media chatter, hiring, social signals, web traffic, partner & customer signings and more to quickly determine which companies have momentum. And which do not. #3 Data Driven: Venture Capital 11 HAVE THE DEALS COME TO YOU Thought leadership / build your brand Want to let entrepreneurs know you’re interested in insurance tech or HR tech or digital health or [insert any industry]? Create data-driven blog / guest posts in minutes - not days or weeks. Ensure founders in your space know you’re the place to go. #4 Data Driven: Venture Capital 12 FIND MORE DEALFLOW SOURCES Expand your network Use data to identify early stage investors who can bring dealflow, mid- and later-stage investors who can serve as follow-on investors and acquirers who might eventually buy your portfolio companies. #5 Data Driven: Venture Capital 13 SEE BETTER DEALFLOW Track your syndicate (or wanna be syndicate) Identify the top investors in a space and create triggers that allow you to see their deals when they happen so you can develop an outreach cadence that develops or deepens syndicate relationships. #6 Data Driven: Venture Capital 14 GET X-RAY VISION INTO FELLOW VCs Stalk your peer firms. Everyone has those firms they view as competitive peers. Who and what are they investing in? What deals did they just do? Which investors are they cozying up with and sourcing deals from? Find out who is sending them deals and and build those relationships. #7 Data Driven: Venture Capital 15 ENSURE DEALS NEVER SLIP BY Use lineage tracing to ID companies and investors you should know The best VCs use data to analyze the deals they missed and figure out where the holes in their deal sourcing net are. Build your network so you never miss another deal. #8 Data Driven: Venture Capital 16 Assess the Deal How to assess the attractiveness of a company and the market it competes in Data Driven: Venture Capital 17 TRACK THE SMART MONEY Assess the quality of investors Is the smart money investing in this space, have they moved on or were they never interested? #9 Data Driven: Venture Capital 18 AVOID THE VALLEY OF DEATH Understand rate of follow-on activity. Are companies in this space trapped at the seed or Series A stage or is there later stage capital available? Does this industry have a fundraising valley of death? #10 Data Driven: Venture Capital 19 Don’t have money for an army of analysts or research reports to test your thesis on markets. Use data on investments, exits, and analyze where the smart money is betting to figure out whether a market is attractive of not. LET OTHERS DO THE LEGWORK Refine your investment thesis. #11 Data Driven: Venture Capital 20 DON’T TRAP YOUR MONEY Analyze health of exit activity in the space. What have exits in this market looked like? Is there a history of venture-level exits in this space? If not, do you have conviction that this company will be the first? #12 Data Driven: Venture Capital 21 UNDERSTAND COMPS How competitive is the space? How well funded are competitors in this sector vs the company I’m evaluating? What’s the momentum of the companies in this sector? Is there too much competition? Or if there is no competition, why not? #13 Data Driven: Venture Capital 22 DON’T REPEAT HISTORY What failed? Who are the companies in this market that failed? How much funding did they have? From who? Did competition kill them? Was the market not big enough? Can I learn anything by studying these failures or talking to those founders or investors? #14 Data Driven: Venture Capital 23 Win the Deal How to give yourself a legup and provide value pre-close to win competitive deals Data Driven: Venture Capital 24 ARM THEM WITH COMPETITIVE INTEL Keep them posted on competitors Share insights on competitors - funding, news, strategic moves - that help busy founders understand what is going in the market without having to do the legwork. #15 Data Driven: Venture Capital 25 MAKE YOURSELF INDISPENSABLE Make them smarter on the industry. Give founders insight into industry and competitive trends and a view into where things are going. Use data from financings, exits, news, patents, earnings calls and more to become a partner that makes them smarter and saves them time. #16 Data Driven: Venture Capital 26 CREATE A SPACE TO WORK TOGETHER Collaborate with them on pressing strategic questions. Share the industry landscape Collection you built on CB Insights during diligence and use it to discuss strategy, competition, recent events, companies they might want to poach from, etc. #17 Data Driven: Venture Capital 27 Nurture the Deal How to help your companies scale and get to a good outcome Data Driven: Venture Capital 28 WIN THE WAR FOR TALENT Poach talent for your companies. Identify struggling firms using the Mosaic score or look for exited companies that might have talent becoming available post-earnout to help your portfolio win the war for talent. #18 Data Driven: Venture Capital 29 FIND THEM THE NEXT CHECK Pinpoint follow- on investors. Want to be ready when your portfolio company is ready for the next round? Identify strategic or financial investors who you want in the next round and help your company raise faster, earlier and smarter. #19 Data Driven: Venture Capital 30 FIND EXIT OPPORTUNITIES Identify potential acquirers. Keep tabs on every potential acquirer globally by understanding their activity levels, prior valuations paid and strategic areas of focus. Use this data to build relationships between your portfolio company and its executives and potential buyers for now or down the road. #20 Data Driven: Venture Capital 31 2ND PLACE IS THE FIRST LOSER Keep them ahead of the competition. What are competitors upto? What’s their financing situation? How is their momentum? #21 Data Driven: Venture Capital 32 YOUR DATA-DRIVEN VC CHECKLIST #1 Determine who is going to raise before they’re raising #2 See every deal in geographies & industries of interest #3 Quickly target the best companies #4 Thought leadership / build your brand #5 Expand your network #6 Track your syndicate (or wanna be syndicate) #7 Stalk your peer firms. #8 Use lineage tracing to ID companies and investors you should know #9 Assess the quality of investors #10 Understand rate of follow-on activity. #11 Refine your investment thesis. #12 Analyze health of exit activity in the space. #13 How competitive is the space? #14 What failed? #15 Keep them posted on competitors #16 Make them smarter on the industry. #17 Collaborate with them on pressing strategic questions. #18 Poach talent for your companies. #19 Pinpoint follow- on investors. #20 Identify potential acquirers. #21 Keep them ahead of the competition. Data Driven: Venture Capital 33 If you’re a client of CB Insights and aren’t using the platform to do any of these and would like to learn, please contact us. If you’re not a client and would like to learn how to become a data-driven VC, we’d love to talk to you. OWN THE FUTURE. Data Driven: Competitive Intel cbinsights.com @cbinsights

Venture capital is a competitive game. Here’s how data can give you an unfair advantage. From sourcing deals to analyzing markets faster to finding talent for your portfolio to identifying follow-on investors to pinpointing acquirers, data is power.

About Techcelerate Ventures

Tech Investment and Growth Advisory for Series A in the UK, operating in £150k to £5m investment market, working with #SaaS #FinTech #HealthTech #MarketPlaces and #PropTech companies.

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