Roberto Bonanzinga, co-founder and investment partner of venture capital firm InReach Ventures, told the audience why artificial intelligence technology can help corporate venturing firms improve their deal pipeline and unearth investments at scale.
Speaking to editor-in-chief James Mawson at 2019 Global Corporate Venturing Symposium, Bonanzinga explained that the biggest asset a firm has is data and not the amount of cash they have on hand.
“For me I am surprised by how little people are talking about it because that is where corporate venturing should be leading in terms of innovation,” he said.
With venture capital firms and corporate venturing units investing in one deal out of approximately 1,000 they have seen, their job really comes down to building ‘a funnel source’ of those potential investments. InReach prides itself on having more software engineers than investors, using AI-based technology to source potential opportunities at scale.
Bonanzinga said: “We are trying to apply a software layer that supports all aspect of the value chain and portfolio management,” and went on to explain the challenges of deal sourcing in Europe as an example. In order to find the right companies you have to have people working across different countries or time zones.
Through InReach’s mixture of machine learning and expertise in the space, Bonanzinga claims the firm can examine ‘a couple of thousand’ companies in a month. The staff do this by applying everything they have learned and the techniques they have gained to data.
“It is not about hiring a data scientist to figure out the data,” he said. “This about re-engineering the basic process of what it looks to invest and re-engineering, the industry’s approach.”
According to Bonanzinga, the technology allows InReach Ventures to access a pipeline of investments at scale, but it has also helped unearth potential investments from fairly obscure parts of Europe, and he pointed to an investment in Lithuania-based retail importer Oberlo as an example.
“These guys were trying to drop shipping between China and the United States using Shopify,” he said.
“It was basically an app on Shopify. These guys had enormous amount of traffic for such a small company and after discovering them using the technology, we looked a little deeper and found out the founders were all drop shipping experts. No one would have known this company exists without the AI tech.”