The next generation in venture capital

Traditionally speaking, venture capitalists make investment decisions using "rules of thumb". Scientifically speaking, this approach is called heuristics. Heuristics is when decisions are made based on limited information relying heavily on past experiences. Today, there's more data about startups than ever. In an industry driven by data and analytics, it only makes sense to have a rational approach in investing using data, models and stochastic theories

We select investment opportunities through the lens of multi-factor analysis. We deploy capital in a calculated way. We optimize and solve for how much to invest at any given round.

This analytical way of thinking is the basis for how we invest. Read more here...

we add value via science

When it comes to partnering with the right VC firm, the founders hear every truism out there. Yes, we have the right connections needed for a startup. We know all about perseverance, drive, and dedication. But what a startup truly needs is real scientific guidance on their path to growth. What is the right pricing strategy? How do you optimize distribution? What levels of traction is needed for explosive growth? These aren't simple questions one can answer by thinking through. These are scientific questions PhD candidates work on every day. Our background is in operations research and our team has tackled these questions. Our expertise is in pricing and revenue optimization. We know how to build elasticity curves, how to set dynamic pricing levels, how to optimize for revenue or growth and how pricing applies to the specific type of product or service being offered. And in the meantime, we wrote the book on this issue:


venture/science in the press:

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The Fund

Our funds are formed based on a three tenets: bias-free selection, calculated deployment, and risk concentration. 

1. Cognitive biases are toxic when it comes to making investment decisions. That's why we evaluate startups for their merits in terms of technology and business. 

2. Instead of deploying capital arbitrarily from deal to deal as it's been done traditionally, we perform complex stochastic calculations to determine check sizes, re-up levels and dry powder similar to the way it's done at legendary funds such as Pimco and Berkshire Hathaway. 

3. Risk concentration is key in venture capital. Many managers deploy capital to way too many companies particularly in the beginning which leaves very little room for mistakes and caps the upsize. This is why the term "spray and pray", "chasing homeruns" or "seeking unicorns" are commonly heard in discussions regarding fund returns. To avoid early mistakes, we've built bias-free multi-factor selection models such as the one we used to evaluate Y-Combinator's Summer 2014 graduating class. Since we're confident in the alpha we add at selection and capital deployment tasks, we aim to invest in a maximum of 10 companies per fund.

 

Here are some great reads on rational decision making:

A new breed of fund managers

We believe that hierarchical structures commonly deployed by traditional venture capital firms do not replace the dedication of the legendary founders that created the outstanding returns once enjoyed in the VC industry. We therefore aim to keep our team small, nimble, flat and well connected to the ecosystem in Silicon Valley.

 

matt@venture-science.com

matt@venture-science.com

Matt Oguz

Founding PARTNER

Entrepreneur & Investor. Decision theorist.

GSU (MBA), Bogazici University (BS CE), Oxford (English)

National Physics Scholar

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Victoria Cheng

Partner

MBA with honors, Columbia Business School, magna cum laude from Georgetown University (BS).  

HIG Capital, New York City Seed Fund, Investor Growth Capital, Foundation Capital, and Core Innovation Capital

Kauffman Fellow

sonen@venture-science.com

sonen@venture-science.com

Selahattin Onen

MANAGING PARTNER

Entrepreneur, investor, corporate leader. CEO at G101, ASYA Fruit Juice & AGE Co. 

University of Denver - BSEEStanford University - Business School, Exec Program for Growing Companies

Science Advisors

Atalay Atasu, PhD. - Georgia Tech
Dave Goldsman, PhD - Georgia Tech
Ozalp Ozer, PhD - UT Dallas

 

We all know that it's important to add value to the companies in the portfolio. There's no shortage of truisms when it comes to how VC's support and value companies such as empowering entrepreneurs, providing connections, etc, etc. What we provide is a bit different. For example:

How do you price your product? What's your pricing strategy? Do you understand the price elasticity and the response of the customer segments? We help formulate a revenue strategy. We know how to do it because we wrote the book on it:

Do you understand how traffic, traction and growth occurs? What level of granularity should you focus when you review your metrics?

When is the right time to raise capital? How much should you raise? Do you understand the nature of the venture capital asset class and how managers really deploy capital? We guide you through that important process. Read more...

We don't believe in the term "hot deals" but we believe in dedicated, smart, and hard working entrepreneurs who build "hot" companies. We'd much rather share the results of our analyses with peer VC firms and look for synergies than to elbow them out of deals. 

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