How do you balance intuition and data in venture capital decisions?

The VC landscape can be extremely difficult to predict. However, data is only the first step to analysing a startup in my opinion as it can be forged, manipulated and impractically multiplied. Intuition plays a pivotal role in taking the final decision.

When it comes to looking at landscape of investors or opportunities in the world of lifesciences, Deep understanding of the domain along with some real life Experiences matter more than the smarts

Balancing intuition and data in venture capital involves integrating analytical rigor with experience-based insights. Use data for due diligence, including market analysis and financial projections, to build a factual foundation. Trust your intuition to assess the founding team's vision and execution ability. Combine these by using data to validate gut feelings and intuition to interpret data beyond surface metrics. This balanced approach leads to more informed, holistic investment decisions.

In my venture capital experience, balancing intuition and data has been crucial. I rely on data to provide a solid foundation for decisions, analyzing market trends, financial metrics, and competitive landscapes. However, I also trust my intuition, honed through years of industry experience, to identify potential that data alone might miss. For example, during one investment, data indicated moderate potential, but my intuition about the founder’s vision and resilience led me to proceed. This balance not only mitigated risks but also maximized rewards, underscoring the importance of combining both approaches in venture capital.

The best teams, the best "pickers", good funds, bad funds, they all have roughly the same probability of success. If you appreciate this reality, then how do you maximize your odds of success? For funds, the data shows that it is to own as much Series A exposure as possible. Later rounds are not proportionally "de-risked" just because they are later and more expensive. These markets are incredibly inefficient and follow human momentum logic more than financial anchoring For individual investors, if you choose to invest in venture, invest in 20+. Never 1, or 2 or fewer than 5. Be prepared to lose all of your money. Then once (if) you're successful, you can write a blog about how you were right and not just lucky

The best investors, using unicorn hit rate as the metric, largely use intuition to make their decisions given the uncertainty of the asset class. They are often smart, accomplished, and well pedigreed. That said, the very best have a hit rate of ~8%, the second and third best, 4-5%, then all of the others who are well known in the industry are at 2-3%. Everyone else falls somewhere below. If this doesn't sound that high it's because it's not. Which means intuition is not your best ally to find a $1BN+ company.

Venture capital is a way for you to participate in the innovation economy, which holds immense potential to transform industries and change lives. This is very exciting. Though, if it were so easy, everyone would do it all the time. So my advice is: If you want to invest in start ups, you should be in a position to be able to 1. Lose all of your invested capital. 2. Really enjoy the process and have fun. 3. Realize a lot of it is luck.