In 2018 alone, more than $24.6 billion of venture capital was invested into artificial intelligence (AI) and machine learning (ML) globally, according to PitchBook data.
And appetite only seems to be growing. Yet, the VC industry has historically relied on personal network and gut feeling to make investment decisions—a stark contrast to the companies they’re interested in.
Could the worldwide adoption of technology and machine learning actually change how VCs vet investments and perform due diligence on opportunities?
This question helped guide the creation of PitchBook’s VC Data Usage Survey. Not only did we set out to discover how venture capitalists around the world currently leverage data and machine learning, but also their sentiment toward adopting it in the future.
In the report we touched on how some of the survey results differed by location, but wanted to take a closer look and see if European and American investors responded differently.
Question: What is your firm’s most common use case for leveraging data?
Both European and American investors reported they leverage data most often for the same three use cases.
European investors’ top use cases:
American investors’ top use cases:
Question: How important is data to your firm when evaluating venture capital investments?
Nearly 9 in 10 respondents from Europe agreed that data was somewhat or extremely important when evaluating investments, a similar percentage to American respondents (85%).
Question: Which is more important to you when evaluating venture capital investments?
When it comes to data and intuition, European and American investors agree both are important for evaluating venture capital investments.
73.12%
of European respondents
chose both data and intuition
65.52%
of American respondents
chose both data and intuition
Question: Do you think investment professionals will ever 100% rely on machine learning to evaluate and execute venture capital investments?
A majority of European and American investors agreed that although data is important, intuition will always be a part of the evaluation process.
of European respondents believe there
will always be an element of intuition
of American respondents believe there
will always be an element of intuition
Question: Does your firm currently or plan to use machine learning technology to inform venture investment decisions?
In contrast to previous answer results, European investors and American investors largely differed on their responses to this question. In fact, less than half of all European respondents reported they plan on increasing adoption of ML, and 49.47% reported they do not plan on increasing adoption. Yet, more than half of American respondents said they have plans to increase their usage of ML in the future, and 38.51% reported they do not plan on increasing usage.
of European respondents plan on
increasing their usage of machine learning
of American respondents plan on
increasing their usage of machine learning
Not only do European and American investors both say data is important when evaluating investments, they also report using data mostly for the same three use cases. Further, both groups overwhelmingly believe data will never be the sole factor they look to when evaluating investments—intuition or “gut feel” will continue to be important.
The sentiment toward leveraging advanced technology like machine learning is a different story though. American venture capitalists are significantly more enthusiastic about adopting machine learning capabilities than European investors.
For more results and analysis, download the complete 2018 VC Data Usage Survey results.
About the survey:
PitchBook’s VC Data Usage Survey was on online survey administered via email to venture capitalists (angel/seed, early-stage and late-stage) as well as corporate venture capital investors in the winter of 2018. The respondent pool, which consisted of 391 people, involved a mix of PitchBook clients and non-clients. From Europe, there were 93 respondents (16 clients and 77 non-clients). From the US, 174 respondents (32 clients and 141 non-clients).