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Two Sigma Ventures built an AI tool called Georges to help them find startups that human VCs overlook


Dan Abelon, partner at Two Sigma Ventures

Summary List Placement

Every Tuesday, the father of venture capital, Georges Doriot, greets Two Sigma Ventures with a friendly "bonjour" and a list of potential companies to invest in. 

"Georges is a teammate," Dan Abelon, a partner at Two Sigma, said. "Constantly growing and getting smarter." 

The real Doriot, long credited with pioneering modern venture capitalism, passed away in 1987. But when Two Sigma Ventures built an artificial intelligence (AI) tool to find great companies, Abelon thought Doriot was the perfect namesake. 

"Why don't we just pick the person in history that we want most want on our team and name it after that person?" he said of his thought process. 

And so, three years ago, "Georges" was born. (Abelon affectionately refers to it as a "toddler."). Once a week, Georges sends an email with recommended companies based on an ever-growing collection of datasets, tracking things like web traffic, fundraising rounds, and mobile rankings. Abelon estimates about 12% of the fund's investments have come from Georges' suggestions, including the fund's investment in expert database NewtonX. 

Georges fits right in at Two Sigma Ventures, which primarily invests in data-driven companies. The NYC-based early stage firm is the venture arm of hedge fund Two Sigma Investments and has backed startups like Radar and sports analytic company WHOOP. While six people work on Georges full time, Abelon said they use expertise from the hundreds of data scientists across Two Sigma. 

The use of AI in venture is a rapidly growing trend. Global research firm Gartner predicted in March that 75% of venture capitalists and private equity investors will use AI to make investments by 2025 — a huge leap from the 5% that use it now, according to the Wall Street Journal. Firms like SignalFire and EQT Ventures already use data-driven tools to help determine investments, a rebuttal to the traditional VC mindset of relying on personal introductions.

"It is very much a people business, but also it's 2021," Abelon said. "It seems somewhat inconsistent for us as VCs to not be thinking about ways to use data science and software to improve our own business." 

Abelon said Georges pushes them to be better VCs, consistently suggesting companies they may not have found otherwise.  

"We want to have strong networks, but we shouldn't just rely on them," he said. "That's not fair to entrepreneurs."

So, when Georges recommends a company they wouldn't typically consider, the team makes a point to learn more and find out why it was suggested. 

"We trust Georges," Abelon said. 

The suggested startups have at times challenged the team's assumptions about venture. For example, Abelon used to be skeptical of companies that raised funds immediately after its last fundraise. However, every Tuesday, Georges' list repeatedly included companies that had fast consecutive rounds.

Instead of being a sign the company was raising too quickly, Abelon realized it was more often an indicator of rapid growth. 

Georges is constantly being updated with more datasets and fundraising information — as it matures from a "toddler" to a teen, Abelon is excited to see what else they learn.

After all, who wouldn't want the legendary Doriot on their side, even if just in AI form? 

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