Data, data everywhere

Technology has finally caught up to a point where GPs can use mountains of data to their advantage, writes Vantage Software founder Greg Woolf.

We’re drowning in data. A staggering amount of content is being added to the web every minute, but data doesn’t have to be your enemy. Using the right tools, you can turn data into your friend – and establish a competitive advantage to boot.

Every day deal teams scour publically available content, industry subscriptions and their own proprietary knowledge bases to identify potential deals. Investment firms have to be extremely creative in identifying data trends to highlight opportunities, such as new hires or facility expansions, which may indicate company growth. And when they find them, the diligence process requires even more research of company profiles, management biographies, competitive landscapes and intellectual property advantages or risks.

We hear from investment teams that prospective portfolio companies are as quick to tell them the “good stuff,” but their challenge is to identify the “bad stuff” in a timely manner, either through verifying the facts presented or by finding out “we don’t know what we don’t know.” And that’s not just for new opportunities; it applies even more so to existing investments when the investment firm has already committed its funds. Says one top-tier venture client, “The worst thing we can do is be blindsided by our investors who find out something bad about a portfolio company before we do.” With the exponential increase in digital content, merely adding people won’t scale fast enough to address the problem. We need better technology to combat more data.

So how to get ahead of the curve? Either finding that diamond in the rough before someone else does, or making sure to “leave no stone unturned” during due diligence or portfolio monitoring? The problem is that most of the important narrative about companies doesn’t reside in easily accessible databases with convenient rankings and quantitative scores for risks and opportunities. Most content about companies is in the form of raw, unstructured text via industry news, company write-ups, blogs and various subscription databases which requires a new breed of qualitative tools to combine, digest and analyze the content for meaningful interpretation. 

Even accessing a firm’s internal proprietary knowledge is a challenge. Our clients tell us, “We have a hundred gigabytes of ‘know-how’ locked in documents on our networks from years of investment research, and yet have no way of extracting the valuable info they contain.” 

Over the last year software providers have developed tools to turn mountains of data to your advantage. For instance, using the latest in intelligent software and machine learning through strategic partnerships with global partners like IBM Watson, we’ve built technology able to scour and analyze millions of pages of text, ensuring that investment managers have the right info at the right time to make sophisticated decisions. 

Finding out “what you don’t know” about a deal can make the difference between poor returns and great returns, the lifeblood of a successful investment firm.

Greg Woolf is the founder and chief executive of Vantage Software, an industry software provider for investor relations, investment reporting and deal management.