How Does D3VC Apply AI to Identify Investment Opportunities?

Dear CCA Followers,

I’ve had the privilege of engaging in numerous calls and discussions with individuals over the past few weeks regarding D3VC. One recurring question that arises is, “What sets D3VC apart from other venture funds?” The answer lies, in part, in our utilization of AI and Machine Learning to expedite our deal sourcing and vetting processes. Naturally, this prompts the subsequent query, “How does the AI actually function?”

While I cannot divulge the extensive 18 months of effort dedicated to developing our algorithm, I can provide you with a high-level overview of our approach:

First and foremost, we leveraged AI and Machine Learning to construct a state-of-the-art algorithm. This algorithm serves as our guiding force when making investment decisions. To ensure its accuracy, we harnessed a unique dataset from CCA, containing over 150 data fields encompassing crucial information related to online investment opportunities. These fields encompass details about the companies seeking capital, their financials, historical performance, and funding rounds.

To empower our AI algorithm, we embarked on a meticulous process of labeling historical data from CCA. This enabled us to discern the defining characteristics of successful and failed ventures. By doing so, our algorithm became proficient at recognizing signals that forecast success or failure. To mitigate the risk of overfitting the algorithm to the training data, we conducted rigorous validation while fine-tuning the model. Subsequently, we subjected the AI model to independent holdout samples to evaluate its performance.

The regular validation of our AI algorithm is of paramount importance to us. We continually update it with fresh data to maintain consistent and stable performance. Moreover, we prioritize the regular rebuilding of the model to capture the latest patterns and assess the value of the latest AI technologies. Given the dynamic nature of economic and investment trends, it is crucial for our algorithm to adapt to these shifting dynamics. This involves appropriately weighing recent data against older data.

When evaluating a company, our AI algorithm conducts a comprehensive analysis by examining similar companies that have experienced either success or failure in the past. It compares the historical markers of these companies to the one under evaluation, determining whether they share similarities that indicate potential success or failure. This process allows us to extract predictive signals from the data, providing insights into the potential trajectory of the company.

It is essential to understand that our AI-driven process does not replace the expertise of our investment committee (IC). Rather, it accelerates the decision-making process by significantly reducing the number of companies that require exhaustive analysis. Our AI algorithm narrows down the diligence list from hundreds to a select few, allowing the IC to focus their valuable time and expertise more efficiently. On average, we review five companies each week and select two for investment, resulting in approximately 100 investments per year.

To create a well-diversified portfolio, our aim is to invest in around 200 companies during the capital deployment period of our fund. This level of diversification is critical due to the power-law distribution of venture returns. By spreading our investments across a broad range of opportunities, we achieve solid returns while effectively managing risk. This commitment to diversification sets us apart from other venture funds.

Don’t miss out on this opportunity to join our select group of early investors in the equity crowdfunding space. By joining our waitlist, you will secure priority access to our upcoming investment opportunities.

We’re thrilled to have you join us on this journey and shape the future of early-stage investing. Stay tuned for more updates as we progress towards our official launch.

Warm regards,

Sherwood Neiss



Please note that this email is intended solely for informational purposes and should not be considered as an offer to sell or a solicitation to buy securities. Any investment in D3VC or its affiliated funds will be made solely to accredited investors pursuant to Regulation D, Rule 506(c) of the Securities Act of 1933. Participation in our investment opportunities is subject to verification of accreditation status and compliance with applicable securities laws. Please consult with your legal and financial advisors before making any investment decisions.