
How Software Will Change Venture Capital - bonanzinga
https://medium.com/entrepreneurship-at-work/inreach-ventures-fb6b3e20c773
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gjmulhol
I will caveat this and say that I am speaking from an entrepreneur's
perspective, and OP obviously has more experience investing than I do, but I
am skeptical of taking this line of thinking too far.

There is a problem with this model—and I am not saying it won't work—that VC
firms get the best deals by having high deal flow and have a reputation for
working supporting entrepreneurs (or in some cases firing the CEO and making
the company extremely successful). If you treat the VC market like the stock
market, with quant trading firms, you will: (1) miss deals because oftentimes
once a company has any visibility it is too late to get in their investment
pipeline, (2) make bad decisions because it is hard to extrapolate from very
little data.

To your point about no management fees, unless you are independently wealthy,
how do you cover costs? I ask not as a rhetorical device, because it is not
possible to propose such a thing without a plan, I am just interested to know
how you think about it.

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bonanzinga
Let me first thank you for the comment. I try to answer your questions:

1 - RE Software - We have no intentions to transform investing in startups in
stock market style investing. As mentioned in the article we use tech in 3
areas one of which is discovery and structure deal flow. We do not believe in
automating investment decisions.

2 - Re ZERO management fee - We will announce in few weeks how we made this is
possible. I can anticipate that this is a structural chance in the way how we
built the firm more than the result of 3 rich boys waking up to the investment
fever.

