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Quantitative Investing in Shampoo1

My partner Andy wrote a blog post on with this title today. I like the title so much that I want to feature the post on AVC today too. I have been a skeptic about data-driven venture capital investing for a long time. However, I do think CPG is a sector where this could work very well. Can a machine help you invest in shampoo? Coffee? Another consumer product? Last week, the USV portfolio company CircleUp announced the closing and launch of CircleUp Growth Partners  – a $125 million fund that will use a quantitative machine learning approach to invest in early-stage consumer and retail brands. We believe this is an important evolution towards using data technology to make investment decisions – a theme we at USV have invested in many times ranging from Lending Club to Funding Circle to Numerai. CircleUp Growth Partners is slightly different. The Fund’s thesis is that one can use machine learning to determine early-stage equity decisions in consumer companies. This machine learning platform, Helio, identifies and evaluates companies across billions of data points. The Fund is live right now – Helio recently analyzed 3,400 vitamin and supplement companies and flagged HUM Nutrition as being in the top 3% for brand score. This ultimately led the Fund to make one of its first investments in that company. The provocative proposition is that a system like this can run these types of analyses at scale and pinpoint brands earlier and with more efficiency than traditional investors. Consumer investors historically have had to spend around 75% of their time sourcing deals manually. Helio is able to automate this entire sourcing process and provide data-driven insights to help companies grow. Helio has also been applied to two other business lines – credit and marketplace.  CircleUp originally operated solely on a marketplace model but has recently launched a credit arm that provides working capital to consumer companies. These three business units all provide data back to the model, which in turn makes each better in its own domain. This is a data network effect – Helio is continually improving. The focused industry of consumer goods should lend itself well to this approach; consumer packaged goods all share the same business model, and data proliferates across the industry. Could data-driven investment models like that of Circle Up be extensible to sectors beyond consumer goods? It will be interesting to see how these approaches might affect capital formation more broadly, as data applications move to designing new financial products and services we have not yet even considered.

Would it help_

“Would it help?” – 3 powerful words that cut through the noise. The next time you find yourself: feeling a surge of anger getting irritated reacting to something that isn’t going as per plan thinking up a sarcastic response to get back at someone harboring envy or jealousy feeling worried Ask yourself – would it help? A calm and measured response aside, nothing really does help. Any other reaction is a waste of time, energy and emotion. You know this. I know this. We also know it is hard to remember this in the heat of the moment. So, instead of expecting us to respond better, let’s just make it a point to ask – “Would it help?” Over time, we will respond better. (I thought of this wonderful line recently as I thought of a post from December 2015 after watching “The Bridge of Spies.” If you’ve seen the movie, you’ve likely seen these words in action. And, if you haven’t, maybe it’s time to see the movie. :)) Share this: Facebook Twitter LinkedIn Like this: Like Loading... Related

My new book came out today!42

My new book came out today! Source:

Reaching people on the internet13

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Election Day

It’s election day and I’m going to stop by the polls this morning and vote. It would be easy for me to skip the polls as there is not much at stake in NYC this year. Mayor de Blasio is going to get re-elected fairly easily as he has no strong challengers. The same is true of the other citywide officials and most city council members, including mine. But I am going to vote in spite of all of that. I think one of our biggest problems in our country is voter apathy. So I am going to demonstrate against that by showing up and voting in an election with little to nothing at stake.