In this episode, Jeremy Muir a partner in MinterEllisonRuddWatts’ Financial Services team talks to special guest, Thomas Thurston, Chief Technologist at Ducera Partners, an investment bank with over $750 billion transactions to date. Thomas is also a partner and CTO at WR Hambrecht + CO, San Francisco-based venture capital and investment firm. The episode focuses on Thomas' quest to build a data-driven strategy for venture capital investment, eliminating guesswork.
[01:24] Jeremy and Thomas speak about challenging traditional investing models. Thomas shares his prior experience and observations on how companies and VCs focus on successes rather than failures, and emphasises the need for understanding the success rate of start ups.
[04:07] Thomas then introduces the idea of using data to predict start up success or failure, acknowledging the need for a more objective, data-driven approach.
[04:49] Thomas further talks about the multivariate nature of decision-making in venture capital, together with the challenge of unpacking variables related to the team, product, and market, and their dynamic interactions.
[07:56] Drawing parallels with Moneyball in sports, Jeremy and Thomas discuss whether the data-driven approach in business can be comparable to other areas, such as sports analytics and consideration of team performance.
[12:16] Jeremy and Thomas discuss the traditional venture capital decision-making process, and how Thomas’ new approach leads to efficiencies in decision-making that is done in a quantitative way.
[14:06] They then talk to the bias that is inherent in the traditional process, and how coding and AI can be used to minimise this bias significantly.
[16:58] Thomas talks about leveraging AI to identify businesses already demonstrating success. He highlights the selective approach, and talks about how he is more concerned about not investing in “bad” start ups, rather than missing out on “big” ones.
[17:59] They talk about the evolution of terms like data science and analytics. Thomas mentions the challenges faced when initially quantifying start ups and the perception of squashing creativity.
[18:39] The two discuss the extent to which VCs are using technology in their investment decisions – successfully or otherwise. They talk about the challenges faced by venture capitalists and the slow adoption of quantitative tools.
22:57] Thomas highlights the limitations of traditional deal flow efforts in covering large and complex markets. He emphasises the challenge of knowing all potential companies in a specific market and narrowing them down.
[26:49] They discuss the potential for New Zealand to take a lead in using data and analytics for global venture investing. Thomas talks about the underdog spirit in New Zealand and the desire to do things differently.
Please contact Jeremy Muir or our Technology team if you need legal advice and guidance on any of the topics discussed in the episode.
Please get in touch to receive an episode transcript, noting that this episode dates from 22 January 2024.
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