Intuition Plays Key Role in VC Investment Decisions: Study

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Despite the growing availability of data for the consumption of the Venture Capital industry, many of its key players still rely on gut instinct to make decisions, according to a new study.

That study, Venture Capital Data Usage Survey from equity market data provider Pitchbook, showed that 85% of respondents believe there will always be some degree of intuition involved in VC deal-making. Only 8% think investment decisions will be fully automated in the near future.

A majority of respondents to the survey, 86%, believe data is an important tool in evaluating investment opportunities, with most of those who gave that response located in the US and Aisa.

“There’s no question that the availability of data has led to a whole new way of doing business,” said Steve Bendt, VP of Marketing at PitchBook in a statement. “The accumulation of data over the years combined with faster computing power has allowed AI-powered innovations to transform entire industries.”

Among some of the key findings of the study is that most investors rely on their personal networks for evaluating investment opportunities. Most who would use data would rather balance data usage with intuition rather than to depend entirely on pure numbers alone.

The fast rising tech phenomena Machine learning is being looked at by many investors for future use, but is not seen yet as a key tool for determining investments according to the study.

“Our survey shows strong adoption of data to inform investment decision-making and a growing appetite to increase usage,” Bendt said. “While the majority of respondents believe VC investing will always involve the human element, there’s enthusiasm to explore how machine learning can automate traditional VC.”

The complete study, based on responses from 391 investors, is available here.


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