Investor Matchmaking: A Case Study

Background

A digital health company that develops artificial intelligence solutions for monitoring brain health needed to find investors for two investment rounds. The company enlisted a firm that connects startups with funders, to assist them in identifying highly-matched potential investors.

The Challenge: Finding “the right” investors

The firm’s data-driven approach to connecting companies with the right deal structures and investors had led the team to a successful track record of deal-making on behalf of its clients, but team members wanted to find out if they could complete the investor matching process faster.

The Managing Director at the firm described the process: “We spend hours, and sometimes days, matching each deal with potential investors. We were curious if we could automate part of the process to cut our research time in half, giving us more time to devote to relationship-building and other tasks that require humans rather than an algorithm.”

The firm teamed up with Wrench.AI, which had developed an investor matchmaking tool that uses natural language understanding (NLU), a form of artificial intelligence and one step beyond natural language processing (NLP).

Both the firm and Wrench.AI used their individual approaches to determine which potential investors were a high match for the upcoming health company’s fundraising deals, using a list of 415 Angel investors.

The Results: Making a good process even better

In the firm’s case, it took two team members up to six hours to generate a list of potential  investors, and to whom they assigned high fit scores, using their vetting criteria. Wrench.AI, on the other hand, uploaded the same list to its NLU platform and created corpora (detailed descriptions of the company, it’s products, and both deals), generating a list of highly-matched investors in under an hour.

Both the firm and Wrench.AI assigned scores based on a scale of zero to 100, with the latter number being the highest fit score an individual investor could be assigned.

The Wrench.AI matchmaking tool assigned the firm’s investor picks with an overall net investor opportunity match of 136.  

The Wrench.AI tool, in comparison, conducted its research in less than 60 seconds per Angel investor, finding a net investor opportunity match of 8,740. This was verified by both teams and roughly indicated that the tool found a net of 62x more investment opportunities as one human being doing the same research, to produce a list of top matches for the health company’s fundraising deals.

Overall, the tool was able to complete the exercise 21x faster than its human counterparts. Said the firm’s Managing Director: “After the experiment, we started using the tool and found that it complemented our process tremendously. Aligning our clients with the right potential investors is a critical process because it allows us to be faster, yet more precise. It will make a big difference in improving a process that was already working well—now it will work even better.”  

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