In 2023, Valor reviewed 2,000 startups for potential seed lead rounds. With 50 weeks in the “working year,” that’s 40 a week, at a pace of 8 a day.
At Valor, our success in sourcing allows us to pioneer a groundbreaking concept–the “infinite analyst.” This initiative propels us to the forefront of using AI to optimize venture capital investment management lifecycles, freeing our talent to focus on critical thinking and decisions.
Few people possess the intellectual curiosity, mathematical frameworks, business breadth, and technical skills to mine for gold in the rushing river of new startups. You’re probably familiar with the role of the analyst—the unsung heroes in the investment world. These professionals balance due diligence tasks and a large pipeline of new investment opportunity. Most metrics continue to show our industry stuck in the same old cycles—2% of VC going to female founders, less than 1% to founders of color, etc. The scale of the wealth and innovation overlooked is massive, but most VCs, remain content to count the capital they have created rather than mourn the opportunities that they’ve missed–they are operating in satisfycing.
What’s the root cause of this complacency? It’s partly due to the limited resource of analyst time, which is super expensive and quite frankly, rare. If you want to make the best investments from a huge data set, and you have limited bandwidth, shortcuts that limit that data set you prioritize makes a lot of sense. Thus, it’s perpetually hard to flush out the role of cognitive bias in venture capital. It’s a “good-is-the-enemy-of-great” scenario.
Bias is the bane of great decision-making.
- What if you could meaningfully remove the time and money constraints of sourcing and diligence in VC?
- What if the temptation to take shortcuts that leverage cognitive bias, like leaning on known networks, were removed?
With our AI platform, we’ve found a way to optimize early analysis, ensuring that our team’s judgment and intuition are unconstrained by analyst time or intellectual capacity. We call this concept the “infinite analyst.”
Since its launch in September, Valor’s genAI platform, named Vic, built on OpenAI’s Chat GPT and Salesforce Apex, has accelerated the way we handle investment opportunities. We are excited about it helping us essentially eliminate bias from the early investment screening process AND leveraging great economies of scale for our LPs. Our operating partner, Jean Luc Van Hulst, who spearheads this project, provides an in-depth look into Vic’s capabilities in his recent blog posts, accessible here and, for more technical background, here.)
Vic’s deployment aligns with our strategic vision to source the best possible portfolio based on our strategy. Some of the ways it does this now, as we go into 2024, include:
- Conducting high-level assessments of pitches based on our screening criteria, which also helps us respond to founders faster.
- Assisting in the diligence process by filling in crucial information gaps.
- Updating our database with the latest information from founders, ensuring quick access to the most current data on emerging opportunities.
- Prioritizing inbound pitches based on our criteria, ensuring that the most promising startups in line with our strategy get noticed right away (regardless of their founders’ connections, etc.).
- Sharing existing portfolio company information in a timely manner, for example, with board directors before board meetings.
- Emailing back and forth with our team on information needs. If you have ever had to run reports in Salesforce, you can imagine how much faster it is to ask a few questions of Vic via email and get back the detail you need—rather than customizing and building your own report in a Salesforce backend.
Just one example: for Startup Runway, we processed some 500 applications, speeding up the response time to founders. This previously would have taken several days of human labor and frustrated dozens (if not hundreds) of founders who wanted more timely feedback.
Valor was founded in 2016 with the vision of being the best possible early-stage VC in our region. Building proprietary AI is helping us achieve this mission. Hope you’ve enjoyed this quick peek behind the scenes. If you know a seed-stage startup looking for a lead investor, please share it with us right here.