Connetic Ventures Employs AI to Streamline Startup Investment Process

The startup landscape is witnessing a growing influx of capital, particularly in Artificial Intelligence (AI) ventures. However, it's not just about pouring money into promising startups. Investors are increasingly turning to AI to maximize their most valuable asset: Time. One such innovative player is Connetic Ventures , based in Kentucky, which has created a distinctive AI-driven approach to identify and support budding startups.

Meet Wendal: AI's Answer to Startup Evaluation

Connetic Ventures has developed an AI-driven software named Wendal that acts as the initial screening phase of their investment funnel. The platform evaluates founders based on 13 specific entrepreneurial traits, determining if an interaction with the investors could be beneficial. The assessment takes a mere 15 to 20 minutes, and the venture firm commits to providing a decision within three days.

Wendal was conceived during an idea brainstorming session among angel investors keen to effectively locate and back startups across Indiana, Kentucky, and Ohio. As Chris Hjelm, a partner at Connetic, explains, raising funds and accessing enough deal flow to support a fund is achievable in prominent funding hubs like San Francisco or New York. However, beyond these hubs, a more discerning approach is needed.

The quest for an optimal method led Connetic down a "behavioral psychology rabbit hole", as Hjelm puts it. The result? A collaboration with an industrial psychologist to define the ideal entrepreneurial behavioral profile, which then formed the foundation for Wendal.

Striking Out with Unique Fund Structures

What makes Connetic stand apart isn't just Wendal. The firm operates without a carry component, deviating from the common VC practice of retaining 20% of the earnings generated for their Limited Partners (LPs). Instead, Connetic seeks to open its doors to retail investors through financial advisors, charging a 1.9% fee rather than directly profiting from a startup's success.

A More Equitable Investment Model

By eliminating the pitch and human factors, Connetic believes it has crafted a more equitable model for determining who should secure funding. However, AI systems are only as effective as their training data, prompting some to question Wendal's fairness or ability to evaluate whether a startup founder fits a specific market. Despite these concerns, Hjelm is confident in the platform's equitable design and capability.

As Connetic Ventures continues to leverage Wendal's power and its unique fund structure, it's not just redefining its own investment process - it's paving the way for a new, efficient, and potentially more equitable approach to startup funding.