Venture capitalists increasingly use data analytics to make informed investment decisions. This shift towards data-driven decision-making drives the adoption of VC tech stacks and portfolio management software, enabling you, as a VC, to manage investments and the portfolio more efficiently and effectively.

According to a recent report by Gartner, “75% of tech investors will prioritize data science and artificial intelligence above gut feeling for investment decisions by 2025.”

One of the trending innovations is machine learning technology which can help you, as a VC, to source and process deals more efficiently.

Use cases for Machine learning in the VC tech stack

ML & Market opportunities

One of the main opportunities for machine learning in venture capital is the ability to spot market gaps and trends. By analyzing data from various sources, you can identify new and emerging markets and areas of untapped potential. This improves your chance to take advantage of opportunities, to meet companies earlier & build relationships, and ultimately make more informed investment decisions.

ML & Portofolio Management

Machine learning has the potential for better portfolio management, including tracking, follow-on financing, and exit planning. By analyzing data on portfolio companies and their competitors, VCs can identify areas of strength and weakness, as well as potential opportunities for follow-on investment or exit. It helps to ensure that portfolio companies are on track to achieve their goals and that you make the most of your investments.

ML & Finding co-investors

Another machine learning opportunity is matching co-investors to new investments and portfolio follow-on rounds. By analyzing co-investors’ preferences and investment history, VCs can identify potential partners for new investments and follow-on financing rounds. It ensures you make investments in the most strategic way possible and that you build long-lasting relationships with your co-investors.

ML & Market research

Competitor intelligence is also an important area where you can leverage machine learning. By analyzing market data on competitors and industry trends, VCs can identify potential threats and opportunities in the market. Imagine having a real-time notification system about the competitiveness of your portfolio companies from G2 or Capterra reviews. You can make more informed investment decisions and develop strategies to stay ahead of the competing VCs. 

ML & Exit planning

Another area where we can leverage machine learning is to find potential acquirers and IPOs, an essential aspect of exit planning. By analyzing data on potential acquirers and IPOs, VCs can identify potential buyers or partners for the portfolio companies and gain insight into the valuation of the investments. This way, ML helps you to develop exit strategies that maximize returns for the investors.

ML & Valuations

Leverage Machine learning to develop more accurate pricing and valuation models, a critical aspect of informed investment decision-making. By analyzing data on a wide range of factors, including industry trends, market size, financial metrics of peers, and market conditions, VCs can develop more accurate models for company valuation. This approach ensures you invest at the correct price tag and that, as a VC, you maximize returns for the investors.

ML & Predicting Success

Finally, you can leverage machine learning to help you predict the likelihood of startup success, including factors such as the probability of 

• a shutdown
• raising the next round
• an IPO or trade sale

Portfolio Management Software for Fund Operations

Portfolio management software is an essential tool for VC firms looking to streamline their fund operations and manage their portfolio more effectively. These tools help you track portfolio performance, monitor key metrics, and make data-driven investment decisions. 

Portfolio management software can also automate administrative tasks such as reporting, compliance, and financial management, freeing up time for fund managers to focus on value-add activities such as deal sourcing and portfolio value creation.

Vestberry can help you build your VC tech stack

Vestberry, a popular portfolio management solution, provides a suite of tools for portfolio tracking, financial reporting, cap table management, and data analysis. We enable VCs to track the performance of their portfolio companies in real time, monitor key metrics such as revenue and user growth, and make data-driven investment decisions.

Our clients build their tech stacks around the Vestberry platform, and our experts can help you build your very own tech stack, including different Machine learning use cases.

About the author

This Industry insights piece is written by Marek Zamecnik, CEO & Co-founder @ Vestberry. Before establishing Vestberry, Marek previously worked in Kuala Lumpur in the investment company called Nova Founders Capital, where he was responsible for the development of the portfolio companies, namely Private Equity Insights.

Reach out to Marek and share your feedback &  insights @ Linkedin