DRIL : The World swears by Data

The Venture Capital (VC) and Startup market have shown significant growth in recent times. So far the evaluation and screening of a potential investment had largely depended on personal experience, quality prospects, and network. But in the times of Big Data, many new resources, analysis techniques, and benefits have enabled almost every founder and investor out there to refine their decision process.

But how does it come into play though? Well, the data-driven approach assists by impacting the deal itself and the screening stages before any sort of investment. It gives way to the decision maker to unlock transactional and informational benefits lowering the short-term costs and raising the return on investment in the long run. In this article, we’ll support this by sharing a few examples that we have managed to compile from the internet. Let’s take a look at how the VCs and founders use Big Data Analytics since it has gained such a prominent role in the eosystem.

Murugavel Janakiraman (Matrimony.com)
You must have heard of the popular matchmaking site called Matrimony.com from India. It was founded by Murugavel Janakiraman. Though the system seems simple, the main game is played by making use of Big Data only. The site sees over 8,000 registrations every day. These petabytes of data have to be generated, sorted, analysed and matched correctly with real-time analytical responsiveness. To help make it more precise while also advertising to the right audience, the site uses e-mails, clickable ads, and text messages, along with IBM’s data technology to generate insights and use it for driving targeted marketing campaigns to attract potential subscribers.

Maxwell Kohl (Kohl’s)
Kohl’s is a retail chain in America founded by Maxwell Kohl. Kohl’s is a good example of how a startup can use big data analytics for behavioural analysis. The chain runs its campaign by pushing personalized offers to the phones whenever a customer enters their store. It also analyses and creates timed content based on a customer’s browsing data as well which is very intelligent and is being adopted by other brands like
Decathlon.If a customer is browsing a particular aisle, let’s say it’s the trousers one. This behaviour gets captured and an offer that is ongoing on trousers currently, or an offer on the trousers that a customer was searching but didn’t end up buying is sent to the device. This is done only with the help of data because a customer tends to react to an offer impulsively when presented while shopping rather than relaxing at home.

Falguni Nayar (Nykaa)
Nykaa, a dominating e-commerce platform for beauty and cosmetic products founded by Falguni Nayar saw a 54.61% jump in the revenue from operations for the year ending March 2022. The main aim of the company is to reach out to a maximum number of customers each year, and with this goal, big data also plays a role in Nykaa’s success. Falguni Nayar claims that having online data is an advantage and a step up from taking things offline since online can function on data insights. While the usual practices like looking at customer behaviour, email campaigns, and follow-up advertisements, data being so resourceful have also become a direct stream for revenue as well.
“They keep asking us for data, so we give it to them. We give some data for free and for some we charge.We are willing to share data, but we have to analyse a whole lot, we don’t see why we should give it for free.
It’s very valuable.” says Falguni. Nykaa has figured out the thin line between sharing insights in order to benefit from the exchange while also not losing on its competitive advantage over the competitors.

Jeff Bezos (Amazon Inc.)

Amazon (founded by Jeff Bezos) is no stranger to dominating the e-commerce market with a wide range of selections to choose from. When you take a quick look at the products on the feed, it is generally different for everyone. Amazon also collects data right from the moment a user opens the website. Even without logging in, the site knows what you are looking for, what’s on the wish list, and what is being looked at and not being bought. Once thiese dataets from many users are brought together, it helps identify a set of people looking at a similar product and the marketing goes along with the findings.
This is called segmentation in which customers are segmented into groups based on interests, behaviour patterns, clicks, preferred choices, etc. This comes with innovation and when Jeff Bezos was the CEO of Amazon, the workforce started implementing ideas such as making the data and insights available to a large group of people in the team rather than just the ones on top of the hierarchy. This allowed everyone to
analyse and interpret data on their own and test out their potential ideas. With data and access in the focus, the company was able to innovate rapidly staying in the lead.

Malte Scholz (Airfocus)
Airfocus is a famous German software company co-founded by Malte Scholz. The company is a platform surrounding product management and its solutions for professional product teams. These products may include the actual market products, online product management, IT services, etc. Airfocus developers use big data analytics by analyzing usage data from the app to decide on further product development and determine what features would land in the market and what wouldn’t. Co-founder Malte Scholz describes it best by saying, “We found out that some of the features that we spent weeks building, ended up being unused.”

While on the other hand, the Venture Capital market hasn’t been all modern throughout the years either but has been dependent upon traditional ways of carrying out usual business. Earlier, these VC investments used to be run by bias toward friendly businesses whether good or bad, making inefficient decisions based
on intuitions, bringing no positive addition to the entrepreneurs, losing money along the way, going for undetermined incentives, and being oblivious to modern technology. But now that we have looked at how some startups and founders are making use of big data analytics since it has gone nuclear in the market,
let’s also take a look at the other side of the spectrum i.e., the VC side of things and how big data is being used there.

Y Combinator
Y Combinator or YC is a VC firm from America and one of the leading startup accelerators out there. Big data and artificial intelligence is a part of the success as the startup has been in touch with using big data since its early days. It also uses a custom-made analytics software as well called HAL.
HAL, the AI software has been built by utilizing past data of over 100,000 applications the company has stored in their archives for years. What the software does is go over these applications and cast a vote on them just like humans after a rigorous and quick analysis, saving a lot of actual human hours.

Index Ventures
Index Ventures is a UK-based VC firm that needs little to no introduction with the amount of professionalism and secrecy it operates with. Like every other big firm nowadays, Index also dwells on big data and has been following analytical practices for years. We get proof of this from an ex-employee named Imhram Ghory.
Imhram claims that he along with the team at Index was responsible for working on a project that was used to identify potential unicorns or indicate unicorns. The program collected and analysed past data and became capable of identifying a good team, good product, and potential investment. As said by Imhram,“Working with big data helps identify the stars who aren’t on the radar.”

Kleiner Perkins
Kleiner Perkins is another well-known VC firm which built an internal system of its own. The first version was called Dragnet which was essentially designed to look at tweets and mentions of any influencers in the tech startup market. Soon, the system was named with other top charting companies and started getting mentioned by people. Later, the system evolved and started analyzing big data from places like the Play
Store, App Store, Facebook, other startups, etc. It allowed the firm to score more deals in the market.

500 Startups
500 Startups, as the name suggests is among the best-recognized startup accelerator VC firms out there in the world. Since the earlier days, the firm has dropped hints on its ties with using big data analytics. However, there is very little information published in this scenario but from time to time, it has been mentioned that the firm has worked on its own software that has assisted in streamlining the firm’s internal functions. It analyses internal operations and data from it to help in accounting, managing portfolios, tracking the fundraising programs, etc.

Venture Science
Venture Science is called one of the initial quantitative-oriented firms, and Matt Oguz leads it. The firm is known for investing over different stages of the process and putting analytical methods to use in capital deployment and selection processes. The firm has also built a strong scoring system of its own which makes use of artificial intelligence & theory of decision to help in every possible opportunity while also trying to predict the attached risk levels. Some things that the system is capable of analyzing are attributes like competitiveness, development stage, the mission of the project, autonomy, applicability around the world, potential market, past records, etc.
Coming towards the end, why not close off with a couple of exciting quotes around data that can be the cherry on top of this information.

1. "Data really powers everything that we do."
- Jeff Weiner, former chief executive at LinkedIn

2. "Data is the new science. Big Data holds the answers."
- Patrick Paul Gelsinger, CEO of Intel

3. "Data is becoming the new raw material of business."
- Craig Mundie, senior advisor to CEO of Microsoft

4. "If we have data, let’s look at data. If all we have are opinions, let’s go with mine."
- Jim Barksdale, former CEO of Netscape Communications

5. "The world is one big data problem."
- Andrew McAfee, principal research scientist at MIT

6. “Time and money are your scarcest resources. You want to make sure you’re allocating them in the highest-impact areas. Data reveals impact, and with data, you can bring more science to your decisions.”
- Matthew Trifiro, Chief Marketing Officer at Vapor IO

7. “Have a vision for what you are trying to do. Use data to validate and help you navigate that vision, and map it down into small enough pieces that you can begin to execute in a data-informed way. Don’t let shallow analysis of data that happens to be cheap/easy/fast to collect nudge you off-course in your entrepreneurial
pursuits.”
- Andrew Chen, general partner at Andreessen Horowitz

8. “In God we trust. All others must bring data.”
- W. Edwards Deming, professor, author, consultant, and more.

9. “Torture the data, and it will confess to anything.”
- Ronald Coase, British Economist

10. “For every two degrees the temperature goes up, check-ins at ice cream shops go up by 2%.”
- Andrew Hogue, head of engineering, Foursquare