Our Selection Model
The use of predictive analytics to improve decision-making is a megatrend that is revolutionizing many other industries and investment classes. But it has not been effectively applied to the U.S. venture capital market—until now.
Drawing from our team’s expertise developing commercially successful predictive models in other industries, we’ve created a powerful, proprietary model for making U.S. venture co-investment decisions.
Predictive models use proven statistical methods to analyze thousands of historical outcomes in order to identify combinations of factors that help to predict future outcomes. When properly designed and deployed, these predictive models have improved decision-making and produced compelling, real-world impacts across a number of industries, everything from credit cards and insurance to direct marketing and major league sports recruiting.
Venture capital is ripe for this kind of industry transformation. Correlation Ventures is excited to be the first to apply predictive analytics to venture capital, opening up new benefits to entrepreneurs and co-investors alike.
That’s why Correlation Ventures has devoted years to building and analyzing what we believe is the world’s largest, most comprehensive database of U.S. venture capital financings. Our database covers the vast majority of venture financings that took place over the past two decades, tracking everything from key financing terms, investors, boards of directors, management backgrounds, industry sector dynamics and outcomes.
Our selection model informs every investment we make. The data we need is extracted from five readily-available documents provided to us by company management. This data is then supplemented with information from our own knowledge base, so we can rapidly and objectively evaluate any new co-investment opportunity.
Each opportunity must score highly in our model and receive final approval from our committee of experienced venture investors. This disciplined process ensures that we consistently bet with the odds—based on everything we know from venture history—over our large portfolio.
We expect that the benefits to us and our investors will be higher returns. The benefit to our co-investment partners is a much simpler and faster fundraising process.