Correlation Ventures, a venture capital (VC) firm operating a co-investment model, has closed its inaugural fund at an oversubscribed $165m, according to the Wall Street Journal.
The model employed by Correlation involves the use of a database built up chronicling almost every venture capital deal in the US over the last 20 years, which it uses as the basis for a predictive model in venture financing, generally investing $250,000 to $4m.
Correlation then embarks on its ventures jointly with an investment partner. The firm states that it makes its decisions in less than two weeks and declines to take a seat on the boards of the companies which receive funding.
Correlation’s collaborative partners chiefly consist of VC and private equity firms but include management consulting firm Point B, whose VC subsidiary Point B Capital jointly invested in call centre marketplace Sales Portal.
Correlation currently has 13 companies in its portfolio, which consists of marketing, IT and life sciences businesses, each company selected on the basis of Correlation’s analytical model.
David Coats, managing partner of Correlation, told the Wall Street Journal that 50 to 75 companies will be financed from the inaugural fund, which was oversubscribed from the $150m figure Correlation originally targeted. Describing the process, Coats said: "It tilts the odds in our favour. I think in fund-raising it helped that we were doing something that differentiates us."