Power Players

Venture Capital Moneyball Algorithm Strategy

Hardball strategy for Venture Capital: The Algorithm Way

These days you need to go above and beyond to beat the competition. It has always been that way but with more investment firms around the world competing to bid for the same companies the competition is only heating up. Venture Capital firms are researching into better ways to research into their potential investments in terms of time efficiency and cost effectiveness.

For example if “algorithms can predict the results of elections, why not the success or failure of a tech startup?”. Questions such as this spark a whole new level of conversation about what factors you can take into account to perform due diligence and test marketability of an idea prior to launching. With the innovations of the past twelve years such as cost effective cloud solutions, aka Amazon AWS, where you can store and process Terrabytes of data in real time with a big enough budget there are plenty of data sources that VC’s can continue adding to the equation to get to the necessary answers. Algorithms are not necessarily 100% accurate, neither are human decisions, but the algorithm can incorporate a lot of real market data such as conversion rates and information for places like app stores, social networks, and google which can help determine the necessary break even numbers and actual potentials for a new idea to get out there.

The stock market has been using algorithms for a long time to determine stock prices and future outcomes, forecasts and marketability of major firms. It is interesting to see how the industry of venture capital continues to grow and even more fun to watch it from deep within Silicon Valley.


Check out more ideas about the “startup algorithm” directly on VentureBeat: http://venturebeat.com/2012/11/09/startup-algorithm/



Article by: Josh Bois, Co-Founder Global Good Networks

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