China VC Fund Relies On Machine Learning To Invest In U.S. Startups

China VC Fund Relies On Machine Learning To Invest In U.S. Startups

Source: Rebecca Fannin, Forbes

Machine learning is trickling over into venture capital thanks to a China-connected investor, Hone Capital, the Silicon Valley offshoot of large Chinese private equity player CSC Group.

At a time when China’s big tech companies Tencent, Alibaba and Didi are pouring money into U.S. startups, Hone Capital is turning to analyzing data patterns to predict the most promising American startups to invest in. How widespread machine learning will become in VC where intuition counts a lot is yet to be seen.

Veronica Wu, an experienced China manager for Tesla and Apple who’s also worked for McKinsey, is leading the effort at Hone Capital, recently rebranded from CSC Venture Capital. She and her team of analysts are relying on data analysis of 30,000 seed-financed startups to determine their likelihood of progressing to an A round. She claims that their models, factoring in such simulations as total money raised and the team’s background, can predict with 80 percent accuracy the outcome. The source data is drawn from Angel List, Mattermark, Crunchbase and Pitchbook. Read entire article…

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