Becoming data-driven is a crucial component for any enterprise seeking to achieve a competitive edge among modern, forward-thinking organizations. Embracing a data-driven approach is not reserved solely for internal success, however; in the world of investing, utilizing data can differentiate which startups and emerging enterprises will become a lead innovator in today’s oversaturated market.
Alec Gilarde, senior associate at Bullpen Capital, led the Data Summit session, “Data-Driven Investment in a Changing World,” delving into venture capitalist investments—powered by data—that radically transform the efficacy of investing while offering reduced risk, scalability, and increased transparency.
The annual Data Summit conference returned to Boston, May 10-11, 2023, with pre-conference workshops on May 9.
Gilarde centered his discussion around “demystifying the world of VC,” where through data, investors can sort through the noise in initial diligence data to highlight which startups are becoming “unloved gems,” or hidden trailblazers in their industries.
This “noise”—characterized by vanity logo chasing, rushed diligence, high valuations, stereotyping, and “bro-buddy” networks—often leaves meritorious startups in the dust. At Bullpen Capital, data-informed investing shifts the focus onto these aforementioned emerging enterprises that are driving exemplary innovation through the power of data.
“When we take the initial diligence, we ingest the raw data and try to normalize for trends, do some data modeling, and give context to the overall data investment,” said Gilarde.
Through a series of external and internal sourcing, examining previous diligence, web scraping, and aggregators, Gilarde explained that Bullpen Capital’s data-driven modeling drives startup revelation while insisting on data validation and engagement with the startup itself.
“If you’re going into different trends and building out trend books, when you look at these trends and the overall growth of the company, we want to engage with the founders to understand what we’re investing in,” said Gilarde. “We’re trying to look at the next future of your product.”
Ultimately, VC can be radically transformed with the help of data-informed analytics; this concept paves the way toward future modernizations, where generative AI may stand to play a key role in reimagining the investing industry.
“In general, VC can be an antiquated business, but going forward, it can be futuristic,” Gilarde concluded.
Many Data Summit 2023 presentations are available for review at https://www.dbta.com/DataSummit/2023/Presentations.aspx.